EU, UK extend trade rules to avoid tariffs on electric vehicles


FILE PHOTO: European flags fly outside the European Commission headquarters in Brussels, Belgium September 20, 2023. REUTERS/Yves Herman//File Photo

LONDON (Reuters) - The European Union and Britain on Thursday agreed to give electric vehicle (EV) makers until the end of 2026 to comply with local content rules, delaying the imposition of tariffs on EVs traded with the UK.

The extension from the previous 2024 deadline would save manufacturers and consumers up to 4.3 billion pounds ($5.45 billion) in additional costs, the British government said.

Britain and the EU are each other's largest market for exports of EVs, which are being encouraged as an alternative to carbon-emitting internal combustion engine vehicles powered by gasoline or diesel.

The timeline extension was proposed earlier this month by the EU. The proposal was then put forward to the EU Council which gave its formal approval on Thursday.

"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," British Prime Minister Rishi Sunak said in a statement.

"We are also leaving no stone unturned to bolster our domestic battery industry and deliver long term certainty for our thriving automotive sector to help them grow their roots in the UK."

Fiat-owner Stellantis, one of the world's largest carmakers, warned in May that British car plants faced closures if the rules were to be imposed in 2024 as planned. Many others in the industry had voiced similar concerns.

A trade association for the UK motor industry lauded the extension of the trade rules.

"Deferring the rules of origin is a win for motorists, the economy and the environment," Mike Hawes, the head of London-based Society of Motor Manufacturers and Traders (SMMT) industry body, said.

"The measure will help cut carbon, support growth and jobs, and is the right decision for the decarbonisation of road transport."

Britain will also look to agree a three-year extension to the equivalent rules with Turkey to support UK car companies who are major exporters to the Turkish market, the government said.

($1 = 0.7884 pounds)

(Reporting by Muvija M; editing by Kate Holton, Jason Neely and Bernadette Baum)

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