The lack of understanding between the United Kingdom and the European Union on Northern Ireland could result in an increase in the price of imported electric cars due to the application of tariffs, warned the leader of the association of British manufacturers.
“I don’t think there is any market and country in Europe that wants to see electric vehicles get more expensive, but that will be the result if this is not resolved,” said the executive chairman of the Association of Automotive Producers and Traders (SMMT), Mike Hawes, in a meeting with journalists regarding the publication of the annual results.
At issue are the rules of origin for components in cars, in particular electric vehicles and their batteries, stipulated by the post-Brexit Trade and Cooperation Agreement.
From 2024 until 2027, the percentage of allowed non-originating components will be gradually reduced, forcing manufacturers to increase the use of parts and materials produced in their respective countries to avoid paying a tariff on the final product, which could be up to 10 %.
Hawes explained that “the battery industry has not been able to invest and expand production quickly enough to allow the automotive industry to meet these requirements with locally sourced batteries.”
“Now we need to find a solution because the reality is that most vehicles will not satisfy that requirement” of the rules of origin, he underlined.
Relations between London and Brussels have been under strain due to the impact of Brexit, particularly in the British province of Northern Ireland, although progress has been made in recent weeks.
The SMMT leader believes that a solution to the impasse will result in an “improved spirit of trust and cooperation” that could unlock an issue that threatens the automotive industry.
Both the UK and the EU predict the end of the sale of new combustion engine vehicles in 2035.
“At a time when governments want markets to move towards electric vehicles, they are at the same time facing the risk of additional costs being levied on these same vehicles”, he emphasized.
According to SMMT, the EU is the main market for cars produced in the UK, 57.6% in 2022, and the main supplier of vehicles registered in the country, 62.8%.