EU Looking to Delay Jan. 1 Tariffs on UK EVs, Batteries

The European Commission last week proposed to extend the current rules of origin for electric vehicles and battery trade with the U.K., delaying the imposition of new tariffs on U.K. electric vehicles until Dec. 31, 2026. The rules were scheduled to take effect Jan. 1.

The commission said the rules, part of the EU-U.K. Trade and Cooperation Agreement, were designed in 2020 to boost investment in the battery manufacturing capacity of EU member states. But unforeseen circumstances -- including the COVID-19 pandemic, Russia’s invasion of Ukraine and “increased competition from new international subsidy support schemes” -- has led to a slower “scaling-up” of the EU battery industry than the EU had expected, the commission said.

The proposal will help EU companies avoid paying up to 10% in tariffs next year for all batteries that originate outside the EU, commission, official Maros Sefcovic said last week. "The proposal is now on the table," he said. "It is for the Council to discuss and adopt it and my team, and I stand ready to help get it across the line over the coming weeks."

The EU stressed the proposed extension is a “one-off” circumstance, and also proposed adding a clause to the trade agreement that will make it “legally impossible” to introduce another extension.

To mitigate the slower-than-expected progress of the bloc’s battery manufacturing capacity, the EU also said it plans to provide up to €3 billion, or about $3.2 billion, in funding for three years to the “most sustainable European battery manufacturers,” which it hopes will “create significant spillover effects for the entire European battery value chain.” This will “foster faster and more cost-efficient support for” electric vehicle battery manufacturing in the EU, the commission said.

The proposal will next be discussed by the European Council and must be approved by EU member states.