European Commission to pitch 3-year delay to Brexit electric vehicle tariffs

LONDON — The European Commission is to propose a three-year delay to new Brexit tariffs on electric vehicles, two people familiar with the plans told POLITICO.

The proposal — which will be welcomed in London — is expected to be announced at a press conference in Brussels on Wednesday by Commission Vice-President Maroš Šefčovič.

The measure is expected to be approved by EU member state ambassadors in a meeting next week.

A package of financial support for the European battery industry is also expected to be announced to head off concerns from some member states that the rule change could increase dependence on Chinese batteries.

Without the change, 10 percent tariffs are due to hit EVs traded across the English Channel from January 1 2024 when existing grace periods in the Trade and Cooperation Agreement expire.

Though the TCA provides for tariff-free trade between the U.K. and EU, it only applies to goods produced in either of those countries.

The rules of origin for electric vehicles mean that without the change, EVs with Chinese made-batteries would have been hit by tariffs. This is because too much of their value would have been manufactured in China.

The British and European car industries, which pushed for a delay, say they want to use locally-sourced batteries, but that European production has taken longer to come on-stream than expected when the TCA was drafted.

They say that a three-year delay will give the EU and U.K. battery industries time to ramp up production. The global market in EV batteries is currently dominated by Chinese-made products, with the country accounting for around 70 percent of lithium-ion battery manufacturing.

The Commission had considered proposing a shorter delay of just one year — an approach which would have avoided reopening the annexes of the Trade and Cooperation Agreement.