Various transition arrangements designed to smooth

the implementation of the EU-UK Trade and

Cooperation Agreement (TCA) are set to be phased

out on 1 January 2024.

Tariffs would be imposed on electric vehicles (EVs)

with more than 55% of parts sourced from outside the

UK and the EU. This poses significant challenges for

electric vehicle manufacturers that rely on battery

imports from Asia.

The UK is struggling to compete against the green

industry subsidy programmes in the EU and US. This

risks driving electric vehicle manufacturing abroad.

The UK government has been lobbying hard for a

delay or change to the tariff schedule. European trade

bodies have also joined these efforts.

However, the most likely outcome at this stage is that

the new tariffs will be imposed largely as planned.

While the UK government believes Brussels will grant

an extension, the EU seems to see this as an

opportunity to accelerate battery production and

demonstrate to the UK the costs of being a “third

party”.

A new UK government would have the opportunity to

revisit aspects of the TCA in due course, but this will

probably have to wait until 2026. Labour would likely

prioritise delivering the minimal restrictions compatible

with staying in the single market.

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