The UK automotive industry has worked incredibly hard to build momentum behind electric vehicles. Manufacturers have invested billions, retailers have invested heavily in training sales teams and technicians and consumers are becoming increasingly confident about making the switch.
So, the last thing the industry needs now is a political own goal in the form of avoidable tariffs, writes Fraser Brown, managing director, MotorVise.
The calls from the UK and European automotive industries to extend the suspension of -Brexit rules of origin requirements are simply pragmatic. If these tariffs come into force in January 2027, they’ll increase the cost of electric vehicles at precisely the point we’re trying to encourage mainstream buyers to embrace them.
Minimum European content rules
The challenge lies in the rules of origin themselves. To qualify for tariff-free trade between the UK and EU, a vehicle must contain a minimum level of UK or European content. For electric vehicles, that’s much harder to achieve because the battery accounts for such a large proportion of the car’s overall value, making its origin critical.
The original intention was to encourage battery manufacturing in Europe, strengthen domestic supply chains, reduce reliance on overseas producers and create skilled manufacturing jobs.
However, Europe’s battery supply chain hasn’t developed as quickly as anyone anticipated. Despite substantial investment, manufacturers remain heavily reliant on imported battery cells because battery production has fallen well behind expectations.
Covid disrupted supply chains, semiconductor shortages delayed production, geopolitical tensions pushed up costs, and China continues to dominate the supply of critical raw materials.
None of those challenges disappear simply because tariffs are introduced.
From a retailer’s perspective
From a retailer’s perspective, additional supply chain costs almost always find their way to the customer. Higher prices are the last thing the market needs when we’re finally seeing real progress in consumer confidence.
The conversation around EVs has changed enormously over the past few years. Vehicle choice has expanded, battery range has improved, charging infrastructure continues to grow, and many of the concerns that once put buyers off are fading.
Consumers are also becoming much better informed, while recent volatility in global oil markets has highlighted the long-term benefits of reducing our dependence on fossil fuels.
At MotorVise, we work with dealerships across the UK every day, and there’s no doubt the quality of conversations around EVs has improved enormously. Sales teams are more confident, customers are asking better questions and many of the myths surrounding electric vehicles are gradually disappearing.
Affordability comes up time and again
But one issue continues to come up time and again, that of affordability. While the total cost of ownership often favours electric vehicles thanks to lower servicing and running costs, it’s still the showroom price that gets customers over the line.
Any policy that pushes the purchase prices up risks slowing the momentum the industry has worked so hard to build.
That’s why extending the current tariff arrangements makes commercial sense. Some will argue that delaying the rules reduces the incentive to build battery manufacturing capacity in Europe, but I don’t agree. The industry isn’t asking for the long-term ambition to be abandoned. It’s asking for realistic timescales that reflect the enormous challenge of building an entirely new battery ecosystem.
Developing gigafactories, securing critical minerals, refining battery materials, training skilled workforces and creating resilient manufacturing capacity takes years, not months. Those investments are already happening, but they’re not yet at the point where the original assumptions behind the rules match reality.
Introducing tariffs before that infrastructure is ready risks making European-built electric vehicles less competitive while handing an unintended advantage to manufacturers operating with more mature supply chains elsewhere.
Policies that recognise realities
What the industry needs now is policy certainty because everyone wants to see a thriving European battery industry alongside continued growth in electric vehicle adoption. Such ambitions are entirely compatible but must be supported by policies that recognise commercial realities alongside environmental goals.
Extending the suspension of the rules of origin tariffs doesn’t represent a backwards step, rather it acknowledges that extraordinary global events have delayed the development of Europe’s battery supply chain and provides manufacturers with the breathing space they need to catch up.
Author: Fraser Brown, nanaging director, MotorVise
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