SMMT warns that Brexit no-deal tariffs will add £2,800 to cost of making electric vehicles

Time 11 months ago

The SMMT has warned of the threat posed by no-deal tariffs to Britain’s green recovery from the pandemic, saying they would add £2,800 to the cost of making and buying an electric vehicle.

The automotive industry trade body said today (Oct 22) that imposing immediate blanket tariffs under World Trade Organisation rules will add billions to the cost of trade – including how much it costs to build and buy EVs.

A 10 per cent no-deal WTO tariff will add at least £4.5bn to the annual cost of fully assembled cars traded between the UK and the EU, it said.

That will add an average of £1,900 per EU-built vehicle sold in the UK.

But the SMMT says new analysis shows that for fully electric cars with expensive battery technology, the cost increase will be even higher at £2,800.

As such, it will make the £3,000 plug-in car grant pretty much ineffectual.

The tariff would also add some £2,000 to the average cost of UK-built battery-electric cars exported to the EU, it said.

That in turn will make the UK’s products less competitive and the country much less attractive as a place to invest in manufacturing, hampering its ambition to be a global leader in zero-emission vehicle development and production.

Around two-thirds of all BEVs on sale in the UK are built in European factories, it said, and new tariffs would hold back the evolution of the electric car from a niche technology to one with mass affordability.

It says that UK car buyers are on track to register some 78,000 BEVs in 2020, with more growth expected next year.

But it estimates that the ‘price shock’ of the tariff rises could reduce demand for BEVs in 2021 by at least a fifth – and that’s before the likes of possible border delays, supply chain disruption and currency fluctuations are factored in.

SMMT chief executive Mike Hawes said: ‘Just as the automotive industry is accelerating the introduction of the latest electrified vehicles, it faces the double whammy of a coronavirus second wave and the possibility of leaving the EU without a deal.

‘No-deal tariffs will put the brakes on the UK’s green recovery, hampering progress towards net zero and threatening the future of the UK industry.’

Hawes urged the government to pursue an ambitious tariff-free trade deal that recognised the importance of batteries in future vehicle production, underpinning the industry’s own investment in EV tech.

It also had to ensure that people had a choice in accessing the latest zero-emission models.

‘We urge all parties to re-engage in talks and reach agreement without delay,’ he said.

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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