The European Union and the United Kingdom have reached an agreement to extend the deadline for electric vehicle (EV) manufacturers to comply with local content rules to the end of 2026, effectively postponing the imposition of tariffs on EVs traded with the UK. This extension, which moves the deadline from the initial 2024 target, is expected to save manufacturers and consumers up to £4.3 billion ($5.45 billion) in potential additional costs, according to the British government.
Both the EU and the UK serve as significant markets for each other’s exports of EVs, a sector growing in importance as a greener alternative to traditional internal combustion engine vehicles. The decision to extend the timeline was initially proposed by the EU earlier this month and subsequently received formal approval from the EU Council on Thursday. British Prime Minister Rishi Sunak, in a statement, acknowledged the concerns of the automotive sector, stating, “We have been listening to concerns of the sector throughout this process, and I know this breakthrough will come as a huge relief to the industry.
We are also leaving no stone unturned to bolster our domestic battery industry and deliver long-term certainty for our thriving automotive sector to help them grow their roots in the UK.” The automotive industry, including major players like Fiat-owner Stellantis, had previously expressed concerns about the potential impact of the earlier 2024 deadline, warning of possible repercussions such as plant closures. The extension has been welcomed by industry representatives. Mike Hawes, the head of the London-based Society of Motor Manufacturers and Traders (SMMT), commended the decision: “Deferring the rules of origin is a win for motorists, the economy, and the environment.
The measure will help cut carbon, support growth and jobs, and is the right decision for the decarbonisation of road transport.” Furthermore, the British government is looking to negotiate a similar three-year extension for equivalent rules with Turkey, aiming to support UK car companies who are significant exporters to the Turkish market.
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