Tuesday, December 5, 2023

European Automobile Manufacturers Association calls for postponement of tariffs on electric vehicles in EU-UK trade

The European Automobile Manufacturers Association (ACEA) is calling for urgent action to delay the implementation of rules that would impose a 10% tariff on electric vehicles (EV) sold between the European Union (EU) and the United Kingdom. The trade agreement, which comes into force after Brexit, currently requires EVs to have 45% EU or UK content by 2024, with 50% to 60% required for cells and battery packs. Failure to meet these requirements will result in 10% tariffs.

British and EU carmakers have not built enough EV supply chains to meet these standards. As a result, they are asking for an extension until 2027. ACEA has warned that the imposition of these tariffs will raise prices for European EV consumers and hinder their efforts to gain market share amid intense competition internationally.

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Stellantis, a major car manufacturer, has warned that British car plants could be forced to close, leading to huge job losses, if the Brexit deal is not renegotiated in time. Similarly, Ford has stated its intention to gradually transition to electric vehicles in response to current regulations.

The potential impact of these tariffs is significant. ACEA estimates that automakers could face tariffs of up to 4.3 billion euros ($4.57 billion) and experience a drop in production. Despite these concerns, the EU executive has shown reluctance to reconsider the terms of the trade deal.

It is important that the EU and the UK engage in discussions to address the challenges facing the automotive sector. Postponing the tariffs will allow automakers on both sides to properly develop their electricity supply chains and adapt to new requirements.

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