EU electric vehicles risk 4.3 billion euro post-Brexit tariff cost – auto body

EU electric vehicles risk 4.3 billion euro post-Brexit tariff cost – auto body

BRUSSELS (Reuters) – Post-Brexit rules forcing European automakers to source more electric vehicle components from Britain or the EU could cost them up to 4.3 billion euros ($4.7 billion) in tariffs and hit output, a leading industry body said on Tuesday.

Under the EU-UK post-Brexit trade deal, electric vehicles will need to have 45% EU or UK content from 2024, with a 50-60% requirement for their battery cells and packs, or face British or EU import tariffs of 10%.

The European Automobile Manufacturers’ Association (ACEA) on Tuesday called for a three-year postponement of the rules, arguing that time was needed to build up Europe’s battery capacity. For now, automakers rely on battery cells and materials imported from Asia.

It estimated that European manufacturers would have to pay 4.3 billion euros to the UK government in tariffs over three years under the new rules. As Britain accounts for almost a quarter of EU electric vehicle exports, this could cut EU production by up to 480,000 units.

ACEA wrote to the European Commission earlier this month asking for a review of rules of origin for batteries and to agree a three-year postponement with Britain.

It said its members expected only 10% of electric vehicles to comply with the new rules in 2024, making EU producers likely to lose out to competitors from China and other third countries.

Stellantis warned last month that British car plants could close without a swift renegotiation of the Brexit deal.

The European Commission’s view is that the rules are designed to support the development of a strong battery value chain in the EU, and that Brexit had changed the trading relationship with Britain.

Stefan Fuehring, a European Commission official overseeing the post-Brexit EU-UK trade agreement, told a conference last week that EU rules of origin were “fit for purpose” and that the bloc was not considering changing them.

($1 = 0.9160 euros)

(Reporting by Philip Blenkinsop; Editing by Jan Harvey)