The automobile industry in the United Kingdom and the European Union is pushing for another delay in the implementation of post-Brexit tariffs on electric vehicles (EVs), warning that existing supply chains are still not prepared to meet the strict conditions required under the Brexit trade agreement. Industry leaders fear that imposing tariffs from January 2027 could hurt EV sales, weaken investments, and further strain Europe’s automotive sector amid growing global competition.
Under the EU-UK Trade and Cooperation Agreement signed after Brexit, electric vehicles traded between Britain and the EU can avoid tariffs only if a significant portion of the vehicle and battery components are manufactured within Europe. The rules require 55% of a vehicle’s value, along with most battery packs and cells, to originate from the UK or EU markets. If manufacturers fail to meet these “rules of origin,” they could face tariffs of up to 10% on exports and imports.
The regulations were originally scheduled to come into effect in 2024, but following strong lobbying from automakers and governments, the European Commission agreed in late 2023 to postpone them until the end of 2026. At the time, policymakers hoped the extra three years would allow Europe to strengthen its domestic EV battery industry and reduce dependence on Chinese suppliers.
However, industry groups now say those expectations have not materialised. According to estimates cited by the European Automobile Manufacturers’ Association (ACEA), less than 20% of batteries are likely to be produced in Europe by 2027, far below earlier projections. Industry representatives argue that supply chains remain heavily dependent on China, which continues to dominate the production of lithium, battery cells, and other critical raw materials.
Automobile manufacturers have also pointed to several disruptions over the past few years, including the Covid-19 pandemic, semiconductor shortages, rising energy costs, and the economic impact of the Russia-Ukraine conflict. These factors slowed investment and delayed the development of large-scale battery manufacturing facilities across Europe and the UK.
Industry leaders from both sides have urged policymakers to adopt a “pragmatic” approach to avoid harming the transition toward electric mobility. They argue that imposing tariffs on EVs at a time when governments are encouraging consumers to shift away from petrol and diesel vehicles would be counterproductive.
The debate comes amid growing concerns over Europe’s competitiveness in the global EV market. Chinese automakers such as BYD and Chery have rapidly expanded their presence in Europe and the UK, benefiting from strong supply chains and lower manufacturing costs. Recent reports showed EV sales in Britain rising sharply, with Chinese manufacturers gaining significant market share.
The issue is also emerging during a broader phase of trade tensions between Britain and the EU after Brexit. Alongside disputes over EV tariffs, both sides are also negotiating disagreements related to steel import quotas and future economic cooperation.
The European Commission has said discussions with stakeholders are ongoing and that the matter could be addressed as part of wider EU-UK negotiations in the coming months. European leaders are expected to discuss concerns over China’s growing influence in manufacturing and trade during upcoming meetings later this month.
