The European Commission has announced its plans to delay tariffs on certain electric vehicles exported between the European Union (EU) and the U.K. This move is aligned with the interests of carmakers in both regions.
The proposed measure, which would have imposed a 10% tariff on electric vehicles with a significant number of parts made outside of the EU or the U.K., was originally set to take effect on January 1. However, the Commission has submitted a proposal to the Council of the European Union to seek a three-year delay for the implementation of these tariffs. The final decision is expected to be made by the Council on Wednesday.
The main intent behind the tariff plan was to stimulate the development of Europe’s battery industry and diminish reliance on China and other parts of Asia for battery and electrification technology.
In support of the delay, the European Automobile Manufacturers’ Association (ACEA), representing the EU’s car industry, expressed concerns that implementing these tariffs would result in a loss of 4.3 billion euros ($4.64 billion) over the span of three years. ACEA emphasized that the U.K. is its top export location and welcomed the Commission’s proposal. The association is urging the council to approve the delay, emphasizing the importance of protecting not only EU battery-electric vehicle manufacturing but also the entire European battery value chain.
This decision by the European Commission marks a significant development in the effort to bolster Europe’s battery industry and ensure the sustainability of electric vehicle production within the region.
Industry Backs Proposal for Extension
Industry lobbyists from the UK have thrown their support behind a proposal to extend the current grace period for meeting EU vehicle regulations. This extension would provide relief by avoiding damaging tariffs, ensuring that consumers continue to purchase vehicles. It would also allow UK and EU manufacturers to compete on a global scale, while offering the European battery industry time to catch up.
Mike Hawes, head of the Society of Motor Manufacturers and Traders, emphasized the significance of this extension as an opportunity for growth and progress.
EU’s One-Off Deal
The European Union has confirmed that this extension will be a “one-off” arrangement, indicating that any further extensions will be prohibited by the revised rules. In conjunction with this decision, the European Commission has announced a substantial line of incentives worth up to EUR3 billion for the EU battery-manufacturing sector. These incentives seek to support industry competitiveness and safeguard jobs within the EU.
Maros Sefcovic, vice president of the European Commission, expressed his confidence in this measure, emphasizing its positive impact on the European economy.
Positive Market Reaction
Following these developments, Europe’s major carmakers experienced a surge in their share prices. As of 1404 GMT on Wednesday, Volkswagen shares rose by 4.6%, Renault shares jumped by 4.2%, and Stellantis shares witnessed a 2.7% increase. Additionally, Mercedes-Benz shares experienced a 1.6% rise, while BMW stock rose by 1.2%.
These market reactions indicate the favorable response to the proposed extension among investors and industry experts.