New Brexit trade rules covering electric vehicles could cost European manufacturers £3.75bn over the next three years, an industry body has said.

The rules are meant to ensure that EU-produced electric cars are largely made from locally sourced parts.

But manufacturers on both sides of the Channel say they are not ready.

The European Automobile Manufacturers Association (ACEA) also warned the measures could reduce output from EU factories by 480,000 vehicles.

And they said customers would pay the price.

The main problem lies in so-called “rules of origin” which come into force in January. They apply to shipments of cars across the Channel under the terms of the Brexit deal, the UK-EU Trade and Cooperation Agreement.

They will effectively ensure that electric vehicles will need to have batteries produced in either the UK or the EU.

Cars that do not meet the criteria will face 10% tariffs – or taxes – when transported across the Channel, in either direction.

The rules were designed to protect the European industry from cheap imports.

But because battery production in Europe has not ramped up as quickly as expected, carmakers are struggling to meet the new criteria.

It is a serious problem for European manufacturers. The UK is by far their largest export market, with 1.2 million vehicles arriving at UK ports last year. Likewise more cars built in the UK are transported to the EU than any other region.

Steep tariffs could make electric cars more expensive to produce, and potentially push up prices.

The ACEA wants the new rules to be delayed for three years, and it is appealing to the European Commission to take action.

“Driving up consumer prices of European electric vehicles, at the very time when we need to fight for market share in the face of fierce international competition, is not the right move,” said Renault chief executive Luca de Meo, who is also acting as ACEA’s president.

“We will effectively be handing a chunk of the market to global manufacturers,” he added.

Leave a Reply

Your email address will not be published. Required fields are marked *