British car makers have received a Christmas boost from the European Union after the rules allowing tariff-free exports to the continent were extended.
The European Council approved a plan to extend the deadline by which electric vehicle (EV) makers in the EU and Great Britain have to comply with tougher rules of origin requirements – regulations that limit the value of material from a different country in a given product.
The announcement today delays the imposition of tariffs on EVs traded with the UK until 2027, formally approving an EU-proposed timeline formulated early in December.
Europe is the largest market for British carmakers and the UK is the largest market for European vehicle producers.
British industry had been calling for a solution to the impending rule application.
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The Society of Motor Manufacturers and Traders (SMMT) warned in June that growth in British car production could have been cut short in a few months if a solution was not reached with the EU.
Under the Trade and Cooperation Agreement, made between the UK and EU, a phased application of rules of origin was agreed with the first increase due to take effect on 1 January 2024, before a final increase from 1 January 2027.
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The SMMT chief executive, Mike Hawes, welcomed the agreement, and said it was “a win for motorists, the economy and the environment”.
He added: “Maintaining tariff-free trade in EVs will ensure consumers retain the widest and most affordable choice of models, at a time when we need all drivers to make the switch.”
The rules are intended to help buyers and importers determine where products originate rather than where they’re shipped.
They are designed to ensure taxes are correctly applied.
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Prime Minister Rishi Sunak said: “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.
“The UK government is delivering a pragmatic solution to keep costs down for businesses and for people at home who want to make the switch to electric vehicles.”
