The European Union has made a significant policy reversal by deciding to impose a three-year delay on tariffs concerning the sale of electric vehicles between Britain and the EU. Originally slated to commence in January 2024, this delay aims to alleviate concerns raised by the EU automotive industry regarding the substantial costs associated with a post-Brexit 10-percent tariff.
In response to industry pleas, requests from the British government, and appeals for pragmatism by EU lawmakers, the European Commission now seeks a one-off extension until December 31, 2026. However, this proposal must formally gain approval from EU member states, with a crucial summit scheduled in Brussels next week.
Despite initial opposition from the commission, the extension proposal includes specific language to legally prevent any further postponement of tariffs beyond the proposed December 2026 date. According to Commission Vice President Maros Sefcovic, this decision eliminates the looming threat of tariffs on the export of EU electric vehicles to the UK and vice versa starting from January 1, 2024.
The European Automobile Manufacturers’ Associations (ACEA) has welcomed the commission’s move, urging EU countries to endorse it. ACEA estimates that the proposed tariffs would have cost the EU vehicle makers it represents a staggering 4.3 billion euros over the next three years, leading to a loss of market share to non-European competitors.
Notably, the EU is particularly concerned about potential unfair competition from more affordable Chinese electric vehicles. In response, the commission launched a formal investigation in October into Beijing’s subsidies for car manufacturers. Commission chief Ursula von der Leyen accused China in September of artificially keeping the cost of Chinese electric cars low through extensive state subsidies.
Sefcovic emphasized that the commission’s proposal aims to “support the competitiveness of our industry and protect jobs in the European Union.” He clarified that this one-off extension cannot be repeated or prolonged.
Under the original deal, tariffs were set to begin on January 1, 2024, for vehicles lacking at least 45 percent UK- or EU-made content and batteries with 50-60 percent sourced from each territory, adhering to “rules of origin.” Alongside the extension proposal, the commission announced additional funding of up to three billion euros to boost the EU’s battery-manufacturing industry. This strategic move seeks to reinforce the EU’s position in the growing electric vehicle market while navigating the complexities of the post-Brexit landscape.