EU reticent to postpone Brexit tariffs on EVs, says UK auto body

FILE PHOTO: Puzzle with printed EU and UK flags

By Sachin Ravikumar

LONDON (Reuters) - The European Union is reticent about agreeing to Britain's plea to postpone looming tariffs on the sale of electric vehicles (EVs) but carmakers remain optimistic a delay can be agreed, Britain's auto industry body said on Monday.

Under the Brexit trade deal, the sale of EVs between Britain and the EU will attract 10% tariffs from January, unless 45% of the value of the vehicle comes from Britain or the EU under so-called "rules of origin".

With many EV batteries imported from China, the tariffs would hit automakers both in Britain and the EU and could lead to higher EV prices for consumers, hindering efforts to cut carbon emissions.

Several major car companies have warned their British car plants will become uncompetitive if the tariffs go ahead. Stellantis, the world's No. 3 carmaker by sales and the owner of the Vauxhall, Peugeot, Citroen and Fiat brands, has said British car plants will close if a deal cannot be agreed.

"Clearly, there has been some reticence or nervousness in Brussels about whether this is something that they would be willing to accept," Society of Motor Manufacturers and Traders (SMMT) Chief Executive Mike Hawes said in an interview, of Britain's call to postpone the tariffs until 2027.

Hawes said the question of the French government's position on the issue remained unclear, after recent media reports that Germany was in favour of a tariff waiver.

"I suppose there is a nervousness about reopening something (in the Brexit deal) ... and if you reopen one bit, does that open it up for the rest? But in this case, it's just about EVs," he said.

A European Commission spokesperson said the Brexit deal was the outcome of negotiations in which Britain and the EU agreed to an "overall balance of commitments," but noted issues raised by either side could be examined by bodies set up by the deal.

If an agreement isn't reached, carmakers would work to ensure their vehicles don't become uncompetitive because of tariffs, Hawes added.

At a press briefing earlier on Monday, he said the industry remained optimistic of an agreement.

"It makes common sense because the last thing you want to do is put additional tariffs on the very vehicles you're encouraging people to buy."

(Reporting by Sachin Ravikumar; Additional reporting by Philip Blenkinsop in Brussels; Editing by Mark Potter)