EU set to stick with post-Brexit EV tariffs despite industry pressure

Legislation | | MIC Customs Solutions |

A senior member of the EC has said it is unlikely that the EU will renegotiate a post-Brexit deal that will see tougher rules of origin on EVs come into force in 2024.

The European Union has signaled it is unlikely to postpone an upcoming change in rules of origin requirements that could see additional tariffs on vehicles imported from the UK despite pressure from leading automakers.

Under current plans, the percentage of total parts that must originate from the EU or UK to avoid extra duties will increase to 45 percent by value - and 60 percent of its battery - from the start of next year.

Carmakers have warned they will be unable to meet these thresholds by this deadline and have called for this to be pushed back to 2027 - a proposal supported by the UK government.

However, a senior European Commission (EC) official has insisted Brussels will stick to its timetable on the issue, indicating that the rules will help support EV battery production in the EU.

EC director Richard Szostak said investment in this area has "fallen off a cliff" in the bloc since the introduction of the Inflation Reduction Act, which has incentivized many carmakers to shift production to the US in order to take advantage of new subsidies.

The rules of origin mean that the battery in ... a pure electric vehicle ... will have to be marked as originating either in the UK or in the EU to pass that test, he told an EU-UK Parliamentary Partnership Assembly this week. 

"If you were to loosen the rules, it means that that battery could be purchased elsewhere in the world, in the US or in China."

It had been hoped that pressure from industry groups in both the UK and the EU would help Brussels come to a deal with the UK to address the issue. Carmakers including Stellantis, Ford and VW have all expressed concerns that the new rules will make them less competitive.

EU car lobby group ACEA has calculated that its members would face a €4.3 billion bill due to the levy between 2024 and 2026, while Stellantis has warned that it could be forced to move production out of the UK in order to avoid additional costs.