Brexit boost for UK as Germany backs delay on EU car tariffs

Germany’s carmakers have thrown their weight behind a UK push for the EU to delay tariffs agreed as part of Boris Johnson’s Brexit deal.

Rishi Sunak’s government is hoping the European Commission will agree to defer costly new tariff rules set to come into force in January 2024.

Britain’s auto industry has already warned post-Brexit “cliff edge” looming at the start of next year threatens the electric car industry.

And now the VDA – the lobby group for Germany’s car industry – said “we must urgently make adjustments” to the Brexit deal to protect both European and British firms.

The group warned that tariffs would place “a significant competitive disadvantage for the European car industry in relation to its Asian competitors in the so important UK market”.

The EU has been warned of an “existential threat” posed by new rules of origin which will require carmakers to build more batteries domestically.

Among the final parts of the Brexit deal agreed by Mr Johnson, the changes require 45 per cent of an electric car’s value to originate in the UK or EU to qualify for trade without tariffs.

One EU official told the Financial times that Brussels was “not open to changes to the rules of origin” and insisted that “stakeholders have been given the time to adapt”.

But carmakers across the continent have been pushing for a delay, because the European battery industry had not developed quickly enough to keep pace new rules of origin.

The European Automobile Manufacturers’ Association (Acea) is calling for Brussels to “extend the phase-in period” because the battery supply chain in Europe “is simply not taking off quickly enough”.

The UK’s Society of Motor Manufacturers and Traders (SMMT) has called for a delay until 2027. Mr Sunak has previously ordered talks with Brussels after Vauxhall’s parent company Stellantis warned that it will be unable to keep manufacturing in Britain without changes to the trade deal.

It comes as Britain struggles to boost its battery production. The manufacturer Britishvolt collapsed earlier this year, while Jaguar owner Tata Motors continues to push the government for subsidies to create a new battery plant in the UK.

Chancellor Jeremy Hunt raised hopes on Wednesday when he said “watch this space”. Asked about a battery production deal with Tata, he said: “Everyone is trying to develop the supply of EV batteries, so we need to have that supply here in the UK.”

It comes as Mr Sunak managed to clear up some of the post-Brexit mess by agreeing a deal with Brussels for the UK to rejoin the EU’s £85bn Horizon science research scheme.

After months of uncertainty, the government said on Wednesday that a “bespoke” new agreement has been signed allowing British researchers to apply for grants and take part in Horizon projects.

The move comes as a huge relief to scientists, amid warnings that UK researchers have been missing out on collaboration with colleagues in Europe in much of the two years since Brexit.