The European Union is considering postponing a 10 per cent import tariff on electric vehicles built in Britain, according to a report in the Financial Times. The European Commission is consulting the car industry on the proposal.
The tariff is a consequence of the origin rules agreed after Brexit. A vehicle exported from Britain to the EU faces the 10 per cent duty unless at least 55 per cent of its value comes from UK or EU parts. Battery cells and modules must reach 65 per cent local content, and complete packs 70 per cent.
The EU agreed in 2023 to postpone the stricter version of those rules for three years. Without a further extension, they take effect in January 2027, and about 70 per cent of the battery-electric and plug-in hybrid cars Britain exports to the EU would face the duty.
The invoice SMMT already costed
The Society of Motor Manufacturers and Traders warned in June that without a long-term solution on EU origin requirements, electric vehicle manufacturers could face a combined tariff bill of GBP 1.4 billion, roughly USD 1.86 billion.
Britain and the EU are each other’s largest export market for electric cars. Both have legislated to phase out new combustion car sales during the 2030s and both are trying to accelerate electric adoption.
Why the Commission is hesitating
The consultation reflects a second concern beyond the tariff itself. Europe’s battery supply chain is not yet mature. Imposing the duty now would raise electric vehicle prices, damp demand, and weaken European and British manufacturers against competitors from China and elsewhere.
That is the awkward core of the policy. Origin rules exist to pull cell manufacturing into Europe. Applied before that manufacturing exists, they tax the very products the same governments are subsidising consumers to buy.
The European Commission and Britain’s Department for Business and Innovation did not immediately respond to a Reuters request for comment.
Editor’s note: This is an adapted translation of the original Gasgoo report. It has been trimmed and restructured for readability for an international business audience. The full original (in Chinese) is at https://auto.gasgoo.com/news/202611/12I70477803C108.shtml.