BREXIT: Postponement of customs duties on electric vehicles to 2027
As of 1 January 2024, a tightening of the post-Brexit transitional rules had to increase the final bill for certain electric vehicles crossing the Channel, adding 10% customs duties. But Brussels, aware of the call from car manufacturers, announced yesterday that this measure would be postponed to 2027.
The European Commission seems to have heard the demands of the automotive sector and announced yesterday, Wednesday 6 December, a three-year postponement of the tightening of the transitional rules of the EU/UK agreement on electric vehicles. Customs duties of 10 % were to apply to certain electric vehicles falling within customs heading Nos 8702, 8703 and 8704 as from 1 January 1983.andJanuary 2024, while for the time being these duties are suspended in full under the tariff preference. This would apply to both British vehicles imported into the European Union and European vehicles crossing the English Channel for sale in the United Kingdom.
Everything was provided for in the Trade and Cooperation Agreement between the European Union and the United Kingdom (OJ L 149/10of 30 April 2021). Until 31 December 2023, customs duty exemption may be granted on vehicles falling within headings 8702 to 8704 if the value of materials or components not originating in the EU or the United Kingdom does not exceed 60 % of the ex-works selling price of the vehicles. This thresholdwas to be lowered to 55 per cent as from 1andJanuary 2024and until 31 December 2026, when a new level was to be defined. Batteries, which account for a substantial part of the price of electric vehicles, are often originating in China. The 55% threshold could thus be quickly reached, adding full duty (10%) on the invoice, an estimated average increase of 4000 € making vehicles much less attractive to consumers.
The whole automotive sector was concerned, particularly on the UK side, with the EU remaining the number 1 market for UK manufacturers hoping that this measure would be postponed to 2027. An opinion shared by the manufacturers of the Twenty-Seven, Germany leading. Although Brussels had been uncompromising on the subject until the end of September, the Commission finally decided to grant an additional deadline by extending the deadline until 1 January 2027. This should be a single extension that should allow industry to prepare and find alternatives.
The British government is trying to attract foreign investors to produce electric batteries in its territory. The Indian group Tata, which owns Jaguar Land Rover, announced last July an investment of £4 billion (€4.6 billion) in a gigafactory of batteries in Bridgewater, near Bristol, southwestern England. Nissan has also announced the launch of a new battery plant project in Sunderland, northeast of the country. Two years ago, the Japanese car giant, along with its Chinese battery supplier, had already injected a £1 billion investment (€1.16 billion) into the Sunderland site. If all these investments are promising, it will take two or three years before they bear full fruit.
Brussels has also planned to provide EUR 3 billion over three years for the most sustainable European battery manufacturers. A measure that should encourage the make in EU, while an anti-subsidy procedure was opened against Beijing, suspected of granting unfair financial aid to Chinese electric car manufacturers (cf.EU opens anti-subsidy procedure against Chinese electric vehicles).
Source(s): eur-lex (page 1091) | The Echoes | European Commission
Editor(s): C. Bedouin