Electric vehicles granted grace period to avoid Brexit tariffs

(EurActiv, 21 Jan 2021) Electric vehicles traded between the EU and the UK have been given a grace period to prevent trade being slammed with tariffs, but battery producers need to start preparing now to meet the deadline, industry sources say.

Under the new EU-UK trade agreement, a maximum of 45% of car parts are allowed to originate from outside the EU in order to benefit from zero-tariff trade between the two sides. Above that threshold, they will face tariffs.

However, because most batteries for electric vehicles come from outside Europe, an annex to the deal grants a grace period for the industry to bring production within its borders.

Until 2023, electric vehicles require at least 40% of content originating from the EU or the UK while batteries require 30% to avoid tariffs. After that, until 2026, electric vehicles require 45% and batteries 50-60%.

“The phase-in addresses a big concern for the industry because to create a battery industry you really need to have scale and demand. The phase-in helps ensure trade can continue, but may not be long enough,” said Nils Poel from CLEPA, the European association of automotive suppliers.

External link

EurActiv, 21 Jan 2021: Electric vehicles granted grace period to avoid Brexit tariffs