UK manufacturers warned of a “devastating price war” on consumers – threatening both the electric vehicle (EV) market and the UK’s climate change commitments – if tariffs are enforced in January 2024.
In the latest major Brexit row, the Sunak government is pushing the European Commission to agree to delay the costly new rules set to come in at the start of next year as part of Boris Johnson’s Brexit trade deal.
But Brussels has shown no sign it is willing to budge – leaving business leaders in despair about the impact of 10 per cent tariffs on exports on Britain’s car industry.
The tariffs would increase the price of a new Tesla Model Y – the UK’s most popular electric vehicle – by £6,000 or more, according to a new report by the Independent Commission on UK-EU Relations.
“For the sake of our economy and our planet, the government has a responsibility to get round the table with the EU, fix this and fix the raft of other issues with the Brexit deal,” said commission director Mike Buckley.
The new rules of origin agreed in the Brexit trade and cooperation agreement (TCA) require 45 per cent of an electric car’s value to originate in the UK or EU to qualify for trade without tariffs.
The British auto industry has warned the 2024 rules pose an “existential threat” to sales because of the lack of domestic batteries to meet the rules – pleading for a delay until 2027.
The VDA – the lobby group for Germany’s car industry – has also called for an “urgent” move to delay, warning that the rules create a “significant competitive disadvantage” for European carmarkers in relation to China and other Asian competitors.
The new report by the Independent Commission on UK-EU Relations – backed by the manufacturers’ body Make UK and the British Chamber of Commerce – warns that the January tariffs will immediately push up costs and hit electric vehicle sales.