UK carmakers dig in for two-year delay to Brexit EV tariffs

Britain's carmakers want a two-year pause on post-Brexit electric-vehicle tariffs with the EU — double what Brussels has floated. The European Commission has shared proposals with the automotive industry that essentially amount to a one-year delay on the rules of origin, according to the Guardian, and they haven't been formally handed to the UK government yet. The wrangling is expected to land at an EU-UK summit planned for next week.

The clock is loud. The 10% duties are due to hit most electric cars traded between the two sides on 1 January unless a deal is struck. The rules of origin, bolted into the Brexit agreement rushed through on Christmas Eve 2020, require UK and EU EVs to use batteries made locally with local materials. They were first slated to start on 1 January 2024, then pushed back in December 2023.

The bet was that the deadline would force investment in homegrown lithium-ion battery plants instead of leaning on China. Three years on, several prominent projects on both sides of the Channel have collapsed. Replacements have cropped up, but many aren't producing at the scale Europe needs — carmakers still lean on imports from China, Japan and South Korea.

One UK executive spelled out the industry's line: "The industry will be really clear – two years minimum or we have the same discussion next year. Giga-industrialisation is happening in the EU and UK but it is not producing at the required volume yet." Another person said the negotiations would hinge on the technical detail of the proposals, not just a fixed stretch of time.

Brussels' draft ideas reportedly tinker with customs procedures and origin calculation methods, which could buy temporary tariff flexibility. The European Automobile Manufacturers Association, a heavyweight lobby in Brussels, has called the tariffs a serious concern. It estimates 82% of EU electric car and van exports to the UK would face the 10% customs duty in 2027 under the rules, adding €1.47bn (£1.23bn) in costs next year alone.

Cars aren't the only sticking point. The EU and UK are also sparring over whether Britain can join "Made in Europe" subsidies and whether it should match EU tariffs on Chinese car imports. Manufacturers on both sides are united in demanding another delay — and so far, no agreement.