Car Industry Calls on EU to Extend Brexit EV Tariff Suspension

Europe's automotive sector is pushing the European Commission to once again delay the enforcement of tariffs on electric vehicle imports under the Brexit trade agreement, warning that neither UK nor EU manufacturers will be ready to meet the conditions taking effect on 1 January 2027.

The original Brexit deal, struck in 2020, required that 55% of a car's total value be produced within Europe to qualify for tariff-free trade. Additionally, 70% of a vehicle's battery pack and 65% of its battery cells would need to be of European origin by that deadline.

When it became clear by 2023 that the industry was nowhere near hitting those targets, largely due to the disruptions of the pandemic and semiconductor shortages triggered by Russia's war in Ukraine, the European Commission agreed to put the rules on hold for three years. That suspension expires at the end of this year.

Now, with seven months remaining, industry leaders say they are still far from compliant. While initial projections had expected 60% of batteries to be manufactured in Europe by 2027, current estimates put the actual figure at just under 20% for EU member states, with the UK performing somewhat better, though still short of requirements.

Senior figures from both the European Automobile Manufacturers' Association and the UK's Society of Motor Manufacturers and Traders have called on both sides to find a workable solution, cautioning that imposing tariffs on electric vehicles would be counterproductive at a time when consumers are actively being encouraged to switch to cleaner transport.

The challenges facing European battery production are significant. Manufacturing costs remain around 30% higher than in China, and building a complete domestic supply chain, from raw material extraction to battery-grade output, demands years of development and hundreds of millions of dollars in investment.

Trade officials have indicated that the matter falls within the scope of ongoing EU-UK negotiations, while European leaders are set to meet on 18 June, with China's industrial dominance among the topics on the table.