The tariffs that could arise as a result of a no-deal Brexit would add almost £3,000 to the cost of electric vehicles, according to a UK car industry body. The Society of Motor Manufacturers and Traders (SMMT) says the average electric car would cost £2,800 more if there were no free trade agreement between the UK and EU.
Negotiators are currently attempting to thrash out a deal, but the prime minister, Boris Johnson, has warned the country to prepare for talks to break down. Whether or not that is a negotiating tactic is up for debate, but the fact remains that such a scenario could see the UK trade with Europe on the World Trade Organisation (WTO) terms. That would mean tariffs of 10 percent on some goods and services traded between the two entities.
According to the SMMT’s calculations, the 10-percent ‘no-deal’ WTO tariff would add “at least” £4.5 billion to the combined annual cost of fully assembled cars traded between the UK and the EU, with an average hike of £1,900 for every vehicle built in Europe and sold in the UK. But for battery-electric vehicles, the analysis suggests the cost would be even higher, with a £2,800 average price hike.
That sort of increase would, to all intents and purposes, cancel out the government’s Plug-In Car Grant, which currently reduces the purchase price of electric cars by £3,000 for eligible customers. The SMMT also says such a price increase could reduce the increase in demand for electric vehicles by around 20 percent, “hindering” efforts to improve uptake and decarbonise road transport.
Furthermore, the SMMT claims WTO tariffs would also add around £2,000 on to the average cost of UK-built battery electric cars exported from Britain to the EU. The organisation fears that would “further hamper” the UK’s ambition to be a leader in zero-emission vehicle development and production.
“Just as the automotive industry is accelerating the introduction of the latest electrified vehicles, it faces the double whammy of a coronavirus second wave and the possibility of leaving the EU without a deal,” said Mike Hawes, the SMMT’s chief executive. “As these figures show, ‘no deal’ tariffs will put the brakes on the UK’s green recovery, hampering progress towards net zero and threatening the future of the UK industry.
“To secure a truly sustainable future, we need our government to underpin industry’s investment in electric vehicle technology by pursuing an ambitious trade deal that is free from tariffs, recognises the importance of batteries in future vehicle production and ensures consumers have choice in accessing the latest zero emission models. We urge all parties to re-engage in talks and reach agreement without delay.”