The newly enacted Brexit trade regulations concerning electric vehicles could potentially impose European manufacturers with a costly sum of £3.75bn within the subsequent three years, this has been communicated by an authoritative body in the industry. The regulations have been established with the purpose of ensuring that electric vehicles fabricated within EU are majorly comprised of parts sourced locally.
Yet, manufacturers present on both sides of the Channel confess their lack of readiness for this transition. The European Automobile Manufacturers Association (ACEA) further cautioned that the measures might result in a deduction of EU factory output by an estimated 480,000 vehicles. It was additionally noted that customers would ultimately bear the financial brunt.
These new bureaucratic hurdles, known as the “rules of origin,” are set to come into effect from January, applying to car shipments crossing the Channel as per the Brexit deal, the UK-EU Trade, and Cooperation Agreement. The regulations will ensure that electric vehicles must have batteries produced within the UK or EU.
Any cars not aligning with these criteria will face a 10% tariff, or taxes, when crossing the Channel in either direction. The implementation of these rules was to defend the European industry against inexpensive imports. However, due to a slower-than-expected ramp-up of battery production in Europe, carmakers are finding it challenging to meet the new requirements.
Such a predicament proves strenuous for European manufacturers since the UK remains their largest export market with over 1.2 million vehicles reaching UK ports last year. Steep tariffs may cause electric cars’ production costs to surge and potentially impact prices.
Successfully postponing the new rules would necessitate an agreement to be initiated between the UK and the EU. The UK’s Business Secretary, Kemi Badenoch, conveyed optimism regarding such a deal being negotiated. However, the EU’s internal market commissioner, Thierry Breton, appeared considerably more guarded.
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