The European and UK automotive industries are intensifying pressure on the European Commission to postpone, for a second time, the looming electric vehicle (EV) tariffs set for January 1, 2027. Under the current Brexit trade deal, strict rules of origin require that 55% of a car's value, including 70% of its battery pack and 65% of its battery cells, be manufactured in Europe to qualify for tariff-free trade. Industry leaders warn these targets are unattainable due to slow battery production scale-up and ongoing supply chain disruptions.
This renewed lobbying effort comes just seven months before the existing tariff suspension expires. The European Automobile Manufacturers’ Association (ACEA) and the UK’s Society of Motor Manufacturers and Traders (SMMT) argue that without a second delay, the industry will face self-defeating tariffs on the very vehicles consumers are being urged to buy. The stakes are high, as these tariffs could increase the cost of EVs by thousands of euros, slowing the green transition.
Why Battery Production Targets Are Failing
The original 2020 Brexit deal aimed to incentivize domestic battery manufacturing. It was hoped that 30% of battery packs and cells would be produced in the EU or UK within a few years. However, the COVID-19 pandemic and the semiconductor shortage triggered by Russia’s invasion of Ukraine severely disrupted investment timelines.
According to ACEA’s international trade director, Jonathan O’Riordan, the industry forecast in 2024 that 60% of batteries would be European-made by 2027. That estimate has now collapsed to just under 20%. In the UK, the figure is slightly higher but still far below the required threshold. The slow pace of “battery drive train development in Europe” has been described as “far too slow” by ACEA’s director general, Sigrid de Vries.
China’s Dominance and High Costs
A major obstacle is China’s stranglehold on critical raw materials, particularly lithium and its refined forms needed for battery cells. European manufacturers also face a significant cost disadvantage. O’Riordan noted that battery manufacturing in Europe remains 30% more expensive than in China. While the European Commission has introduced laws to promote local production, setting up a competitive industry is both costly and time-consuming.
The following table highlights the key challenges:
| Challenge | Impact on European Battery Production |
|---|---|
| Raw material dependency on China | Limited access to lithium and refined materials |
| High manufacturing costs | 30% higher than in China |
| Slow investment returns | Delays in building gigafactories |
| Supply chain disruptions | Post-COVID and geopolitical shocks |
Industry Calls for a Pragmatic Solution
Mike Hawes, chief executive of SMMT, emphasized that “battery supply chains are still not ready to meet these stringent requirements.” He urged both the UK and EU to find a pragmatic solution that avoids tariffs while safeguarding investment in domestic capabilities. The industry is asking for a policy shift at the European Commission to accelerate the transition and provide more flexibility in the rules of origin.
Without a second delay, analysts predict a sharp rise in EV prices, which could dampen consumer demand and hinder the EU’s goal of phasing out internal combustion engines by 2035. The automotive sector, which employs millions across Europe, argues that penalizing the industry now would be counterproductive.
What This Means for Consumers and the EV Market
If tariffs are enforced, the cost of imported battery components could add thousands of euros to the price of an electric car. This would make EVs less competitive against cheaper Chinese models and traditional petrol vehicles. For consumers already hesitant about switching to electric, this could be a major deterrent.
Industry experts recommend that buyers monitor the situation closely. A second delay would likely stabilize prices and encourage more investment in European battery plants. However, if no agreement is reached, the market could face a period of uncertainty and higher costs.
FAQ Section
What are the Brexit EV tariffs and why are they being delayed?
The tariffs are part of the EU-UK Trade and Cooperation Agreement. They require that a certain percentage of an EV’s value and battery components be made in Europe to avoid import duties. The first delay was granted in 2024 because battery production targets were not met. The industry is now asking for a second delay to avoid tariffs on January 1, 2027.
How would these tariffs affect the price of electric cars?
If enforced, the tariffs could increase the cost of EVs by up to 10-15%, adding thousands of euros to the final price. This would make electric vehicles more expensive for consumers and slow the adoption of zero-emission cars.
Why can’t Europe produce enough batteries for its own cars?
Europe faces several hurdles: high manufacturing costs (30% higher than in China), a heavy reliance on Chinese raw materials like lithium, and delays in building gigafactories due to the pandemic and geopolitical events. As a result, only about 20% of batteries are expected to be made in Europe by 2027, far below the target.
