The car industry sees it as a competitive disadvantage, and now there is an important proposal: tariffs on electric cars should be further suspended in trade between the EU and Great Britain.
Good news for the German auto industry: Electric cars are to be exempt from Brexit tariffs in trade between the EU and Great Britain for another three years. The EU Commission made a corresponding proposal in Brussels. Now the ball is in the court of the EU states, which must approve the proposal with a qualified majority. This requires the consent of at least 15 of the 27 EU states. These must simultaneously represent at least 65 percent of the EU population.
Due to Britain’s exit from the EU, new customs rules were actually supposed to come into force on January 1, 2024. Vehicles whose value creation was less than 45 percent in the EU or Great Britain would then have been subject to a tariff of 10 percent. This would affect manufacturers who do not achieve the value added ratio for electric cars due to a lack of battery production capacity.
As the EU Commission announced, aspects such as the Russian war of aggression against Ukraine or the corona pandemic could not have been foreseen when the introduction of the tariffs was negotiated in 2020. Due to the pandemic and war of aggression, a European battery industry has developed more slowly than expected. The Commission proposal also states that there should be no possibility of suspending tariffs beyond December 31, 2026.
Automobile Association satisfied
British car manufacturers feared that they would no longer be competitive in the important EU export market from next year because of the tariffs. German car manufacturers would also be affected by tariffs when exporting to Great Britain in the future if they are not continued to be suspended. The Association of the Automotive Industry (VDA) has already described the taxes as a significant disadvantage for European companies compared to their Asian competitors in the important market in the United Kingdom.
Association President Hildegard Müller responded positively to the EU Commission’s announcement: “This decision is the right one and a win for the climate, industry and consumers.” The proposal must now be implemented as quickly as possible by the EU states and the United Kingdom.
Both British car manufacturers and the German automotive industry will benefit from the extension of the rules of origin, as Marc Lehnfeld from the federally owned company Germany Trade and Invest (GTAI) emphasized. In German-British trade, the so-called car factor – i.e. foreign trade in cars, parts and engines – is the most important group of goods, accounting for around 22 percent this year. “Now the British automotive industry can regain confidence,” said Lehnfeld. “The German automotive industry can also benefit from the shift.” Germany is the British country’s most important supplier of fully electric vehicles and hybrids.
Source: Stern
