Car giants in plea to remove EU-UK tax plans

European car manufactures have called on the European Union to abolish plans to tax the sale of electric vehicles into the United Kingdom warning the move would cost billions of euros and jobs.

The European Automobile Manufacturers’ Association (ACEA) has made what it describes as an urgent plea to the European Commission to act immediately to prevent taxes being imposed on electric vehicles traded between the EU and the UK from January 2024.

The president of the association has said if the taxes are not removed it will simply open up the lucrative UK market to global manufacturers which will be able to import vehicles at a cheaper cost that their European rivals.

ACEA  warned if the Commission fails to act, a 10% tariff will be placed on EU electric vehicle exports to the UK – its largest trading partner. This could cost EU vehicle makers €4.3 billion over the next three years, potentially reducing electric vehicle production by some 480,000 units, the equivalent output of two average-size auto factories.

Under more restrictive ‘rules of origin’ due to apply from January, the only way to avoid these duties will be to source all battery parts and some critical battery material in the EU/UK it added. This is practically impossible to achieve today.

ACEA represents the 14 major Europe-based car, van, truck and bus makers: BMW Group, DAF Trucks, Daimler Truck, Ferrari, Ford of Europe, Honda Motor Europe, Hyundai Motor Europe, Iveco Group, JLR, Mercedes-Benz, Renault Group, Toyota Motor Europe, Volkswagen Group, and Volvo Group.

“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 – neither from a business nor an environmental perspective,” stated Luca de Meo, ACEA President and CEO of Renault Group. “We will effectively be handing a chunk of the market to global manufacturers.”

“Europe should be supporting its industry in the net-zero transition as other regions do – not hindering it,” added de Meo. “There is a very simple and straightforward solution: extend the current phase-in period for battery rules by three years. We urge the Commission to do the right thing.”

ACEA added: “Massive investments are being made in European battery supply chains, but more time is needed to build up the kind of scale needed to meet the rules of origin.”