UK Auto Sector Demands Two-Year Reprieve on EU Battery Tariffs
Industry leaders argue the European Commission’s one-year proposal is insufficient for gigafactories to reach full production capacity before the January deadline.
By Yara Nasser ·
The UK automotive industry is preparing to request a two-year extension for electric vehicle tariffs imposed by the European Union. This move follows an initial European proposal that suggests a shorter one-year delay before the new trade rules take effect.
Customs duties are scheduled to begin on January 1 for most electric cars traded between the UK and the EU. These tariffs stem from a clause in the 2020 Brexit agreement, which requires vehicles to use batteries manufactured with local materials in either region. Without such local sourcing, producers face a 10% charge.
The rules were originally set to start in 2024 to encourage local battery production and reduce reliance on Chinese suppliers. The deadline was previously extended in December 2023 after several major projects collapsed. While new facilities have emerged, many have not yet achieved the scale needed to meet European demand. Consequently, carmakers continue to rely heavily on imports from China, Japan, and South Korea.
A UK executive stated that the industry needs at least two years to adapt. The executive said, “The industry will be really clear, two years minimum or we have the same discussion next year. Giga-industrialisation is happening in the EU and UK but it is not producing at the required volume yet.” Other sources indicated that negotiations would focus on technical adjustments to customs procedures rather than a simple timeline shift.
The European Commission has shared technical proposals with the automotive sector, though they have not been formally presented to the UK government. These documents include adjustments to origin calculation methodologies that could provide temporary tariff flexibility. The EU and UK are also negotiating whether Britain can access “Made in Europe” subsidies and if the UK should match EU tariffs on Chinese car imports.
These issues are expected to be addressed at an EU-UK summit planned for next week. The European Automobile Manufacturers Association, a Brussels-based lobby group, estimates that 82% of EU electric car and van exports to the UK would incur the 10% duty in 2027. The association calculated that this would add 1.47 billion euros, or 1.23 billion pounds, in costs to the sector next year.
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