The European Union's trade commissioner has raised concerns about the potential imposition of tariffs on electric vehicles (EVs) between the EU and the UK after Brexit. Under the current agreement, a 10% tariff will be charged on any EV traded between the two regions from January if less than 45% of its value is derived from the EU and the UK. However, the presence of Chinese EVs in the market has complicated the decision on whether to delay these tariffs.
The automotive industry is pushing for an extension to the tariff deadline, as a large proportion of EV batteries, which account for around 40% of a car's value, are sourced from Asia. The implementation of this tariff would increase the cost of European EVs and have a substantial financial impact on the sector, estimated at €4.3 billion ($4.5 billion), according to industry estimates. It would also heighten concerns in Brussels about China's auto industry enjoying an unfair pricing advantage due to subsidies.
EU Trade Commissioner Valdis Dombrovskis expressed hope that tariffs can be avoided, as he believes that imposing tariffs on each other would not benefit the industry, but only China. British and European carmakers are seeking a three-year extension to the phase-in period to allow for the development of the region's battery supply chain. However, Brussels is reluctant to modify the post-Brexit Trade and Cooperation Agreement, fearing that it may open the door to further revisions.
Dombrovskis suggested that it would be possible to avoid imposing tariffs on EVs without opening the Brexit agreement, although he did not provide further details on how this could be achieved.
During his recent visit to China to discuss trade issues, the commissioner confirmed that the EU's anti-subsidy investigation into Chinese EVs could also target other brands, including Tesla, if they are found to be taking advantage of Chinese support and exporting to Europe. He stated that while no final decision has been made, the proceedings are not limited to Chinese brands. The investigation is scheduled to commence in the coming days.