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EU/UK Accord Delays Tariffs: Electric Vehicle Manufacturers Granted Extension on Compliance Deadline

 |  December 21, 2023

In a joint decision aimed at alleviating concerns within the automotive industry, the European Union and the United Kingdom have agreed to extend the deadline for electric vehicle (EV) makers to comply with local content rules until the end of 2026. This move will postpone the imposition of tariffs on EVs traded between the EU and the UK.

The decision to extend the timeline, which was formally approved by the EU Council on Thursday, follows a proposal made earlier this month by the European Union. The initial deadline of 2024 has been pushed to 2026, providing manufacturers and consumers with substantial relief from potential additional costs. According to the British government, the extension is estimated to save up to £4.3 billion ($5.45 billion), reported Reuters.

The UK and the EU represent each other’s largest markets for the export of electric vehicles, as both regions actively encourage the adoption of EVs as a sustainable alternative to traditional internal combustion engine vehicles powered by gasoline or diesel.

Related: UK Competition Regulator Probes EV Charge-Points

British Prime Minister Rishi Sunak expressed satisfaction with the outcome, stating, “We have been listening to concerns of the sector throughout this process, and I know this breakthrough will come as a huge relief to the industry.” Sunak emphasized the government’s commitment to supporting the domestic battery industry and ensuring long-term certainty for the thriving automotive sector in the UK.

The extension comes in response to warnings from major automakers, including Fiat-owner Stellantis, which cautioned in May that British car plants could face closures if the original rules were implemented in 2024. The decision has been widely praised by industry stakeholders, including the Society of Motor Manufacturers and Traders (SMMT), a UK motor industry trade association.

Mike Hawes, the head of SMMT, commented on the positive impact of the decision: “Deferring the rules of origin is a win for motorists, the economy, and the environment. The measure will help cut carbon, support growth and jobs, and is the right decision for the decarbonization of road transport.”

In addition to the extension with the EU, the British government announced plans to seek a three-year extension to equivalent rules with Turkey. This move aims to support UK car companies that are major exporters to the Turkish market, further demonstrating the government’s commitment to fostering growth within the automotive sector.

Source: Reuters