EVs face a 10% Channel tariff in 2027. Carmakers want out
From January, EVs traded between the UK and EU could face a 10% tariff if their batteries aren't made locally. Europe's carmakers want a delay to 2029. The EU once said no changes before 2032.
In just over three months, electric cars crossing the Channel in either direction could face a 10% tariff. Europe's carmakers are now asking for more time. In a letter reported on 21 September, the European Automobile Manufacturers' Association (ACEA) called for stricter "rules of origin" for electric vehicles under the EU-UK trade deal to be pushed back from 1 January 2027 to the end of 2029.
If nothing changes, ACEA reckons 82% of the electric cars and vans the EU sends to Britain next year would be hit. That's a cost that would, one way or another, end up in UK showrooms.
What "rules of origin" actually means
The Brexit trade deal lets cars move between the UK and EU tariff-free, but only if enough of each car is actually made in the UK or EU. From 1 January 2027, according to FleetPoint, an electric car needs 55% UK or EU content, its battery pack needs 70% and the battery cells need 65%. Cars that fall short pay a 10% tariff.
The problem is batteries. As FleetPoint notes, Europe's carmakers still rely heavily on battery supplies from outside Europe, particularly China. In June, electrive reported that ACEA's trade director Jonathan O'Riordan had estimated that only 20% of EV batteries would be made in Europe by late 2026 or 2027.
ACEA's numbers and its plan
The letter was signed by ACEA president Ola Källenius, who also runs Mercedes-Benz, and director general Sigrid de Vries. It estimates the EU could export about 520,000 electric cars and vans to the UK in 2027, worth around €17.9bn. Of those, 426,000 would miss the new rules, adding about €1.47bn in customs costs.
ACEA's proposal comes in three stages:
- Until the end of 2029: keep today's more flexible rules for battery packs.
- From 2030: require battery cells to be made in the UK or EU.
- From 2032: require the active cathode materials, such as lithium, nickel, cobalt and manganese, to come from the UK or EU too.
As ACEA puts it: "the question is not whether they will be able to comply, but when."
Haven't we been here before?
Yes. The stricter rules were first due in January 2024. After lobbying from both sides of the Channel, including the SMMT, the EU agreed in December 2023 to push them back to the end of 2026, with €3bn of funding to help build up European battery making. At the time, the EU Council said the extension came with a "lock-in mechanism" so that the full rules would apply from 2027, and stated: "Consequently, no changes will be possible before 2032."
That's the wall ACEA is now asking to be moved. The European Commission said in June that discussions "can take place within the framework of ongoing EU-UK negotiations", which is diplomatic for "maybe".
What it means for UK drivers
The rules cut both ways. Cars built in Britain and sold in Europe face the same test. Back in 2023, the SMMT estimated that a 10% tariff would add an average of £3,400 to an EU-built electric car sold in the UK, and £3,600 to a UK-built one sold in Europe. Those figures are nearly three years old, so treat them as a guide rather than a forecast.
At the time, the SMMT said 49.1% of new battery electric cars registered in the UK in the first half of 2023 came from the EU. So this isn't a niche problem. A tariff on half the market could push up prices just as the government is trying to get more people into EVs, and petrol and diesel cars wouldn't face the same penalty.
Ada's take: Europe's battery factories were supposed to be ready by now, and they aren't. Blaming Brussels or Westminster misses the point. This is an industrial timetable that slipped, and consumers are the ones who may pay for it.
To be fair to the carmakers
ACEA isn't asking to scrap the rules, just to phase them in. Its plan ends with tougher requirements than today's, reaching right down to the raw materials. Building battery factories takes years. Punishing EV buyers with a tariff that doesn't apply to petrol cars would be an odd way to speed up the switch. As SMMT chief executive Mike Hawes put it in June, "Battery supply chains are still not ready to meet these stringent requirements."
Mind the hype. Brexit's battery deadline is back, and this time the calendar says 2027.
Sources: electrive, FleetPoint, electrive (June 2026), Council of the EU, SMMT (2023)