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The European Union approved on Thursday a proposal to delay a 10% tariff on electric vehicles in trade with the UK until December 2026 from an original date of entry into force on January 1, 2024.
The delay of the tariff by three years will give EV manufacturers in the EU and the UK more time to comply with the local content requirements for electric vehicles and batteries under the EU-UK Trade and Cooperation Agreement.
The agreement stipulates that only those electric vehicles that comply with the rules of origin, which define the required local content for electric vehicles and their batteries, can benefit from tariff-free trade.
Unless the delay was approved, starting in 2024, the current Brexit deal would have called for EVs transported between the UK and EU to be slapped with a 10% tariff if less than 45 percent of the EV’s value comes from the region—or if less than 50 percent-60 percent of the battery cells and packs come from the EU or UK.
EV makers were quick to show their displeasure with the deal and sought a delay until 2027. The UK and most EU member states have also pushed for a delay.
Earlier this month, the European Commission recommended a three-year delay for EV tariffs in trade with the UK—a delay which is now approved by the EU member states.
The next step will be the tariff delay to be approved by the EU-UK Partnership Council, which has been set up under the EU-UK Trade and Cooperation Agreement, before the end of the year.
The extension of the current rules was proposed by the European Commission as “It was understood that the battery industry could not get off the ground as fast as expected against the background of Russia’s war of aggression against Ukraine, COVID-19’s impact on supply chains and the competition from new international subsidy support schemes, which made it more difficult for electric vehicle manufacturers to comply with the rules of origin under the Trade and Cooperation Agreement,” the EU Council said today.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.