Biplab Das 
Kemi Badenoch, the British Business Secretary, expressed optimism about finding a solution to avoid impending tariffs on electric vehicle (EV) trade with the European Union (EU). Speaking at a Society of Motor Manufacturers and Traders (SMMT) trade event, Badenoch noted the ongoing discussions with EU counterparts regarding the matter.
Trade Negotiations and “Rules of Origin”
The issue at hand concerns the “rules of origin” stipulated in the Brexit trade deal, which require EVs to have 45% EU or UK content by 2024. Additionally, a 50%-60% requirement applies to the battery cells and packs. Failure to meet these requirements could result in tariffs.
However, the existing supply chains for EV components in both Europe and the UK are not yet fully developed to enable compliance with these rules. As a result, automakers could face a 10% tariff, causing potential disruptions.
SMMT’s Appeal for Waiver Extension
The Society of Motor Manufacturers and Traders (SMMT), representing the British auto industry, has requested an extension of the waiver on these rules for another three years. Without such an extension, the UK could witness the closure of car manufacturing plants, leading to significant job losses.
Impact on EV Costs and Government Intervention
According to an SMMT analysis, EVs manufactured in the EU could become £3,400 ($4,150) more expensive on average in the UK. This price increase could hinder the transition to greener vehicles.
Badenoch also mentioned that if negotiations with the EU do not yield the desired solution, the UK government might consider alternative measures to support the auto industry. While specific actions were not detailed, this statement indicates a willingness to address the situation in the event of failed negotiations.
The ongoing discussions underscore the critical nature of finding a tariff solution for the trade of electric vehicles between the UK and the EU, which is vital for the stability and growth of the automotive industry.
