EU set to push back major new post-Brexit tax in boost for car industry

The European Commission is preparing to push back the planned introduction of a 10 per cent tariff on the sales of electric vehicles between the European Union and the UK by three years.

Concerned about the new levy, some of the major car producers in both the UK and European bloc have been lobbying to obtain at least a postponement, with the duty meant to be applied from January 1, 2024.

The full cabinet of Commissioners will look at the proposal on Wednesday and is expected to approve the three-year delay.

The Commission is also expected to propose a €3billion (£2.57bn) fund for the battery industry, hoping to accelerate the homegrown electric vehicle production.

France voiced its opposition to the postponement of the new duty, saying it was wrong to reopen the Brexit trade deal and give the car industry any protection after it had been slow to develop its EV production.

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The European Commission’s proposal to push back the introduction of the new levy is not understood to involve the reopening of the Brexit deal.

Rather, it will need to be put before the Brexit partnership council, which overlooks the implementation of the Brexit deal, after it is approved by the leaders of the European Council.

Moreover, the Commission is also to stress that the suspension of tariff will be a one-off, and car manufacturers won’t be handed a similar opportunity again if they fail again to be prepared for it by the next deadline, expected to be set for 2027.

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The post-Brexit trade tariff was agreed by the EU and UK in 2020, four years before they were meant to be introduced. Then, it was believed European manufacturers would have enough time to ramp up the production of EVs.

But the coronavirus pandemic sweeping across the world dealt a blow to manufacturers, who also lamented China was handed an advantage with its share of the EV market doubling over the last two years.

The bloc announced it will carry out a probe into claims of state subsidies of Chinese EVs.

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In a bid to at least postpone the new levy, European carmakers warned enforcing the tariff within weeks would add costs of up to €4.3bn (£3.7bn), set to either weigh on the shoulders of consumers or of the industry, and made EU-made EVs imported to the UK even more unaffordable to most.

Moreover, Stellantis, responsible for 14 brands including Vauxhall and Jeep, previously warned this tariff could cost thousands of jobs in Britain as the manufacturer might need to close its operations in the UK should the tariff be introduced in January.

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