A plea by the UK for exports of electric cars to get special allowances after Brexit is to be thrown out by the EU, it was revealed today (Oct 14).
The BBC is reporting that it has seen a draft addition to the post-Brexit trade deal that says EVs and hybrid cars will only be zero-rated for tariffs if most of the value of their parts is from the UK and the EU.
According to the BBC, that means that even if a deal is agreed, some car exports from the UK to the EU won’t be eligible, which means they’ll have a 10 per cent tariff slapped on them from January.
It follows the news that the European Commission had rejected proposals that components from Japan and Turkey used on vehicle production lines here should be considered British, meaning the threat of higher export tariffs with or without a deal.
There was also a separate draft legal text in which the UK asked for the manufacturing of goods such as electric cars and batteries to count as British, even if most of the components were imported.
It had wanted the maximum value for parts in electric and hybrid vehicles to be 70 per cent, but the latest draft, which the BBC says was circulated among EU member countries yesterday (Oct 13), puts it at 45 per cent as of January 1, 2021.
Automotive expert David Bailey, professor of business economics at the University of Birmingham, told the BBC: ‘This will catch out some UK-based car assemblers, particularly as the industry electrifies.
‘The car industry is going through fundamental change. The EU see a threat from China, Korea and Japan and is trying to build an electric vehicle supply chain in Europe.’
Honda, Nissan and Toyota have factories in the UK, but Honda is shutting its Swindon facility next year, with some 3,500 people set to lose their jobs.
The BBC says it understands that some car industry businesses here are factoring in for tariffs on some EU-bound vehicles even if there is a deal.
It adds that the latest draft also says that from 2027 only car batteries that are made either in the EU or the UK will be allowed in UK-EU vehicle trade that’s tariff-free.
Both the UK and EU are looking to build gigafactories as demand for EVs rockets.
The BBC says the EU would look to stop the UK from using an EU trade deal that could see it become an offshore assembly hub using mostly US or Asian parts to export into the single market, while at the same time guaranteeing tariff-free access by EU manufacturers to the UK in the long term.