UK and EU move step closer to deal to avoid damaging post-Brexit tariffs

The UK and EU have moved a step closer to striking a deal to avoid post-Brexit tariffs being imposed on electric vehicles (EVs) in what would be a significant boost for car manufacturing.

i understands that Brussels has shifted from a refusal to countenance a delay on the introduction of “rules of origin” from January 2024 and has now tabled a proposal for their postponement amid warnings of the impact on showroom prices.

It comes after i reported growing optimism in Whitehall that the EU could move on the issue amid splits between member states and auto manufacturers and the European Commission.

According to Bloomberg, the EU has approached the UK with proposals that could extend the phasing in of the rules, which could mean 10 per cent tariffs on EVs, by two years.

A three-year phasing in period also remains a possibility, the website reported.

The UK has been lobbying Brussels to delay the rules of origin, required under the UK-EU Trade and Cooperation Agreement (TCA) signed by Boris Johnson, after after Vauxhall’s parent company Stellantis said it would mean crippling tariffs on exports that would leave it unable to make electric vehicles (EV) in the UK.

The new rules would also see EVs imported from the EU, such as the Jaguar I-Pace and cars made by Audi, Volkswagen and Skoda, face 10 per cent tariffs that experts said would be passed on to consumers in price hikes.

That could mean new electric cars becoming around £5,000 more expensive than they are currently, depending on how much of the cost is absorbed by manufacturers. The average cost to buy an electric car in the UK is around £50,000.

Auto manufacturers and the UK have called for a delay in the rules, warning that higher costs could significantly reduce Europe’s market share of vehicles in the UK and that the changes may also prove counterproductive by making Chinese cars more affordable in the UK than those made in Europe.

Brussels has so far insisted it will not reopen the TCA that provides the timetable for the introduction of the rules, while noting that technical adaptations may be possible and refusing to rule out a delay.

A Government spokesman said: “We need a joint UK-EU solution to avoid consumers facing tariffs on electric vehicles from 2024 which do not apply to petrol and diesel cars.

“We have raised this with the European Commission and industry and are ready to work with them to find a solution within the existing structure of the Trade and Cooperation Agreement.

“The UK remains one of the best locations in the world for automotive manufacturing.”