EU set to delay 10% tariff on electric cars from UK, FT reports

EU Expected to Postpone 10% Tariff on UK Electric Vehicles Amid Trade Talks

EU-UK Electric Vehicle Tariff Developments

EU's Plan to Delay Tariffs

Nov 12 (Reuters) - The European Union is set to delay a 10% tariff on electric cars from the UK, the Financial Times reported on Thursday, citing people familiar with the matter.

Brussels is consulting the industry on proposals to postpone the 10% levy that would apply to most electric vehicles from January 1, the FT reported.

Reuters could not immediately verify the report. 

Post-Brexit Trade Rules and Tariff Requirements

Origin Requirements for Zero Tariffs

• The post-Brexit agreement between the EU and the UK says that to qualify for zero tariffs, at least 55% of the value of EVs needs to be from the European Union or Britain, with values of 65% for battery cells and modules and 70% for battery packs.

Tariff Implications and Proposed Delays

• Import tariffs of 10% apply for EVs falling short of those requirements, but the EU in late 2023 proposed a three-year delay to the tightened rules.

• After that delay the post-Brexit rules triggering a 10% tariff on 70% of battery electric and plug-in hybrid models traded with the EU were due to take effect from January 2027.

Industry Response and Market Impact

Warnings from the Automotive Sector

• Britain's main car lobby, the Society of Motor Manufacturers and Traders, warned in June that electric vehicle makers would have to pay £1.4 billion ($1.86 billion) in tariffs if there was no solution on local content requirements.

Significance of the EU-UK EV Market

• Britain and the EU are each other's largest export market for EVs, with targets in both Brussels and London to phase out combustion engine models in the 2030s.

Official Responses and Additional Information

Awaiting Comments from Authorities

• The European Commission and the British Department for Business, Innovation, Science and Trade did not immediately respond to Reuters requests for comments sent outside of regular business hours.

Exchange Rate Information

($1 = 0.7543 pounds)

Reporting Credits

(Reporting by Harishankar Manoj in Bengaluru; Editing by Christopher Cushing and Tom Hogue)