UK Markets closed

No-deal tariffs will cancel UK's electric-car grants, SMMT warns

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
·2-min read
Newly manufactured Tesla electric cars are pictured in a storage area at The Western Docks in Southampton on April 20, 2020, as life in Britain continues during the nationwide lockdown to combat the novel coronavirus pandemic. - US oil prices dived to 21-year lows Monday, giving up more than 30 percent in a market flooded with crude and hit by evaporating demand in the face of the coronavirus pandemic. (Photo by ADRIAN DENNIS / AFP) (Photo by ADRIAN DENNIS/AFP via Getty Images)
Newly manufactured electric cars in Southampton, UK, as the SMMT warns of the impact of a no-deal Brexit. Photo: Adrian Dennis/AFP via Getty Images

The UK’s Society of Motor Manufacturers and Traders (SMMT) has warned that leaving the EU without a trade deal in place would effectively snuff out the move to clean-energy mobility, as the World Trade Organization (WTO) tariffs that would then come into play would effectively negate the UK’s plug-in car grants.

The SMMT based its calculations on the application of a standard 10% tariff on cars exported to, and imported from, the EU.

It said that, in the event of a no-deal Brexit, there would be an average price increase of £2,800 ($3,677) on EU-built fully electric cars, “effectively making the £3,000 plug-in car grant for these vehicles null and void.”

Cancelling out the grant would, by its estimations, put a 20% dampener on consumer demand for battery-electric cars next year.

In terms of exports, these tariffs would add £2,000 to cost of British-built battery-electric cars sold in Europe, thus hurting the UK’s competitiveness as players in the international e-mobility sector.

Watch: What is a budget deficit?

READ MORE: Weakest September in two decades as UK new car sales drop more than 4%

“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,” wrote SMMT chief executive Mike Hawes.

Hawes added that the figures show that tariffs from a no-deal Brexit would end up “hampering progress towards net zero and threatening the future of the UK industry.”

The SMMT underlined how the UK lags behind many of Europe’s major electric vehicle markets when it comes to market incentives, noting that car buyers in Germany enjoy a purchase incentive of up to £8,160 per battery electric vehicle whilst French consumers get a £6,350 grant — UK electric vehicle customers get just £3,000.

READ MORE: Carmakers form CO2 emission pools to avoid hefty EU fines

“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,” Hawes said. “We urge all parties to re-engage in talks and reach agreement without delay.”

WATCH: What is a no-deal Brexit?