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Manufacturers say new trade rules – brought in after Brexit and designed to protect European car makers – will cost them £3.75bn over the next three years

By Tom Gibson | September 26, 2023


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Industry body has said the new rules should be delayed as manufacturers aren’t ready for them

Manufacturers say new trade rules – brought in after Brexit and designed to protect European car makers – will cost them £3.75bn over the next three years

New UK-EU trade rules brought in after Brexit that were designed to protect the industry from cheap imports could actually end up costing them £3.75bn over the next three years.

They were designed to make sure that EU-produced electric cars are largely made from locally sourced parts and cars that do not meet the criteria will face a 10% tariff when transported across the Channel – in either direction.

Both British and European manufacturers are saying they’re not ready with the European Automobile Manufacturers Association (ACEA) warning the measures could reduce output from EU factories by 480,000 vehicles.

The rules will ultimately help to make sure electric vehicles have batteries produced in either the UK or the EU but battery production in Europe has not ramped up as quickly as expected.

It is a serious problem for European manufacturers - 1.2 million vehicles arrived at UK ports last year meaning its by far the biggest export market and, more cars built in the UK are transported to the EU than anywhere else.

"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.

An agreement would need to be reached between the UK and the EU for the rules to be pushed back and the UK's Business Secretary, Kemi Badenoch, said she was "optimistic" this could happen but the EU's internal market commissioner Thierry Breton wasn’t quite so positive.

He told the Guardian, "If something has been negotiated, it shouldn't be changed."

The UK's Society of Motor Manufacturers and Traders, Mike Hawes, told reporters last week that he thought a deal would be done - but it could be a last-minute affair.

"We are still optimistic an agreement can be reached. It makes common sense," he said.

"But I can see this going down, like with Brexit, to Christmas Eve, or something like that."

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