The European Union is set to delay a 10% tariff on electric cars from the UK, the Financial Times reported on Thursday, in a reprieve for carmakers struggling with battery supply chains and growing competition from China.

Brussels is consulting the motor industry on proposals to postpone the levy, which would otherwise apply to most electric vehicles traded with Britain from 1 January 2027. Reuters reported the Financial Times story but said it could not immediately verify it, and the European Commission and the British Department for Business, Innovation, Science and Trade did not immediately respond to requests for comment.

Rules of origin behind the tariff threat

Under the post-Brexit trade deal, electric vehicles must meet strict rules of origin to qualify for tariff-free trade: at least 55% of a vehicle's value must come from the EU or Britain, with 65% for battery cells and modules and 70% for battery packs. Vehicles falling short face a 10% import tariff.

The rules were already delayed once, when the EU and UK agreed in late 2023 to push the tighter requirements from 2024 to 2027. Carmakers say regional battery production has still not grown fast enough. The European carmakers' lobby ACEA estimates that about 82% of the 520,000 electric passenger vehicles and vans expected to be sold in 2027, worth around 17.9 billion euros, would face the tariff under the current rules.

Options under discussion

The proposals under discussion include a simple one-year delay or a two-year arrangement letting manufacturers offset vehicles exported with non-compliant batteries against models sold at home with compliant ones. Two people familiar with the matter said the UK supports the move, and serious negotiations are expected to begin after an EU-UK summit on 20 November.