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The Society of Motor Manufacturers and Traders (SMMT) today (18 October) urged the EU and the UK to strike an immediate agreement to avoid introduction of the “damaging” tariffs. The plea is to delay the implementation of tougher new rules of origin requirements on batteries, which the SMMT said could render EU and UK made EVs uncompetitive in the other market.
EVs that do not meet the new thresholds will be subject to a 10% tariff when traded across the Channel, the SMMT said, with new calculations showing a combined cost of £4.3bn. For the consumer, this could mean an average price hike of £3,400 on EU-manufactured battery electric vehicles (BEVs) bought in the UK, and a £3,600 rise on UK-made BEVs sold in Europe.
Despite the pandemic, semiconductor shortages and trade tensions, the SMMT said EU-UK electrified vehicle trade has more than doubled recently, enabled by the EU-UK Trade and Cooperation Agreement (TCA). It has grown 104% in the three years since the TCA was signed, up from £7.4bn at the end of 2020 to £15.3bn last year, although much of this uplift has been in the last 12 months.
That boost has helped UK automotive global trade get back on track following the pandemic, the organisation said. It is on course to be worth more than £100bn by the end of 2023 according to the latest SMMT report, Open Roads – Driving Britain’s global automotive trade, published today.
“With almost half (49.1%) of all new BEVs registered in the UK in the first half of the year coming from the EU, any cost increase would act as a barrier to uptake, undermining their competitiveness in an important and growing market,” the SMMT announcement said. “Furthermore, 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.”
The issue comes at a “crucial” time, the body said, with manufacturers also facing the UK Zero Emission Vehicle Mandate, which is likely to come into force on the same day (1 January 2024) and compel them to sell ever-increasing numbers of zero emission models, starting at 22% next year and rising to 80% by 2030.
“A three-year delay to the introduction of the stricter rules of origin is a pragmatic solution,” the announcement continued. “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.”
Speaking ahead of an SMMT global trade conference today, chief executive Mike Hawes said: “UK automotive is a trading powerhouse delivering billions to the British economy, exporting vehicles and parts around the world, creating high value jobs and driving growth nationwide.
“Our manufacturers have shown incredible resilience amid multiple challenges in recent years, but 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.”
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