The Society of Motor Manufacturers and Traders (SMMT) has issued warnings of a £3,400 tax hike on electric vehicles (EVs) and is urging the EU and UK to strike an agreement in order to avoid these damaging Brexit tariffs.
The SMMT has claimed that a swift agreement will help to delay the implementation of tougher new Rules of Origin (ROO) requirements on batteries which could severely impact the UK’s ability to sell its EVs in the EU market.
Speaking ahead of a major SMMT global trade conference, CEO Mike Hawes said:
“Unnecessary, unworkable, and ill-timed rules of origin will only serve to set back the recovery and disincentivise the very vehicles we want to sell.
“Not only would consumers be out of pocket, but the industrial competitiveness of the UK and continental industries would be undermined. A three-year delay is a simple, common-sense solution which must be agreed urgently.”
EVs that do not meet the new EU-UK Brexit deal 2024 thresholds will be subject to a 10% tariff when traded across the Channel, resulting in a combined cost of £4.3 billion.
For the consumer, this could mean an average price hike of £3,400 on EU-manufactured battery electric vehicles (BEVs) bought by British buyers, and a £3,600 rise on UK-made BEVs sold in Europe.
The application of a 10% tariff on electrified vehicles alone would undermine shared ambitions to be global leaders in zero emission mobility, holding back markets and undermining the drive to deliver net zero, given road transport remains the biggest contributor to overall carbon emissions.
Conventional petrol and diesel vehicles would escape tariffs, meanwhile, which is likely to have the perverse effect of incentivising the purchase of fossil fuel-powered vehicles.
A three-year delay to the introduction of the stricter rules of origin is a pragmatic solution. It would provide the necessary time for EU and UK gigafactories to come on stream as well as helping the development of local battery parts and critical mineral supply chains.