European Carmakers Warn of €4.3bn Loss and Production Cut in Electric Vehicles Unless EU-UK Tariff Deadline is Extended

European car manufacturers have expressed concerns over potential losses of €4.3bn and a decrease in electric vehicle production by nearly 500,000 units unless the European Union (EU) agrees to postpone tariff implementation between the EU and the UK.

The European Automobile Manufacturers Association (Acea) has argued that China would benefit the most if the EU does not grant the UK's request to extend the deadline from 2024 to 2027. Under the terms of the post-Brexit Trade and Cooperation Agreement, electric vehicles transported between the UK and the EU will face 10% tariffs starting from January 2024 unless at least 45% of their parts are sourced from within the two regions.

Acea contends that more time is required to establish a European supply chain and reduce reliance on imported batteries from China, South Korea, or Japan. The industry group estimates that EU-based companies will pay €4.3bn in tariffs and experience reduced sales between 2024 and 2027, resulting in approximately 500,000 fewer vehicles being manufactured.

The UK is the largest export market for European carmakers, with a quarter of electric vehicles being sold there. While the EU commissioner responsible for UK relations, Maroš Šefčovič, has shown resistance to the request, Acea has been asked to provide evidence of the potential damage to the industry.

Failure to postpone the tariffs would likely benefit China, as its models are already subject to tariffs but can undercut EU competitors in terms of cost of production and access to critical raw materials used in batteries.