The deal to delay the imposition of import tariffs on electric vehicles (EVs) for three years has been officially signed by the European Commission and the United Kingdom, according to Acea, the umbrella organization for European car manufacturers.
In the absence of this agreement, a 10 percent import levy on electric cars would have automatically come into effect on the 1st, provided that less than 45 percent of their value was added within Europe. This regulation was established during Brexit to prevent the disguised transit of goods from other countries.
Throughout this year, it became evident that electric cars, produced both in the UK and the EU, heavily depend on imports from the Far East (China, mostly) for their battery packs. As these packs already constitute over 40 percent of the car’s value, British EVs in the EU and European EVs in the UK would have seen a significant price increase. Recognizing the undesirable impact, car manufacturers and later national governments, considering the fierce competition from Chinese brands, pushed for a delay in implementing the rule.
In response, the EU proposed in early December to postpone the rule’s introduction for three years, allowing time for the EU and the UK to establish their own battery industry. The proposal has now been confirmed by both the EU and the UK.
Acea expressed satisfaction with the development, with Sigrid de Vries, Director-General of Acea, stating,
“The long-awaited agreement to extend the rules of origin for three years provides much-needed assurance for the growing electric vehicle battery supply chain in Europe.”
De Vries also highlighted the potential to avoid $4.3 billion in tariff costs through this deal.
