The European Commission has suggested delaying tariffs on electric cars traded between the UK and EU for three years.
Car manufacturers from both the UK and EU said they are not prepared for the new trade rules that will start after Brexit in January.
The rules were supposed to help the car industry in the EU, but the 10% tariffs would probably make things very expensive.
EU countries must still say yes to the plan at a meeting next week.
The Commission said no to waiting to make the rules, even though car makers and the UK government asked them to.
On Wednesday, the Commission said the EU needs more time to help its car industry because it is still facing problems from the pandemic, Russia’s invasion of Ukraine, and competition from US subsidies.
According to EU “rules of origin,” cars made in the EU or UK would need to be mostly made from local parts to avoid tariffs, starting in January.
The goal was to keep European industry safe from cheaper products coming from countries like China, which has become a big player in the global electric vehicle market.
However, when it comes to trading between the UK and EU, electric vehicles would have needed to have batteries made in either the UK or the EU. Many car makers said they would have trouble meeting this requirement.
Battery production in the local area has been slower than we thought, so the manufacturers have to depend on getting batteries from other places.
Expensive expenses
Trade groups worried that the new rules would make European companies lose £3. 75 billion in the next three years.
There were worries that high taxes could make it harder to make electric cars and might raise prices.
The UK government asked the EU to delay the rules.
The carmakers on both sides of the Channel will be happy because the Commission’s decision means they don’t have to pay tariffs that were supposed to start in January.
European makers send the most vehicles to the UK, with 1. 2 million cars being shipped to UK ports last year. The UK sells more cars to the EU than any other place.
The European Commission wants to delay the rules for three years, but it also wants to add a rule to the Brexit trade deal that says the delay cannot be longer than that. It said that its rules of origin would stay the same from 2027.
The Commission will give €3bn to European battery makers over the next three years to help them grow.
The new deadline is making people pay attention to making electric cars in the UK. Companies like Jaguar Land Rover are planning to build big factories to make car batteries, but they haven’t started making any batteries yet.
There are still questions about a place in Blyth, Northumberland that has been chosen to make car batteries.