The UK and European car industries are pressing Brussels for a second delay to post-Brexit electric vehicle tariffs, warning that domestic battery supply chains remain far short of the thresholds due to take effect on 1 January 2027.
Industry bodies representing manufacturers on both sides of the Channel are seeking another adjustment to the EU-UK Trade and Cooperation Agreement, under which electric vehicles must meet tougher rules of origin to continue moving tariff-free between the two markets.
Under the current timetable, 55% of a car’s value must be made in Europe from the start of 2027. The rules also require 70% of the battery pack and 65% of the battery cell to be made in Europe. Vehicles that fail to meet those thresholds would face tariffs when traded between the UK and the EU.
The rules were designed to encourage investment in domestic battery production after Brexit. However, manufacturers argue that the assumptions behind the timetable have not materialised, leaving the sector exposed to new costs while being pushed to accelerate electric vehicle sales.
Jonathan O’Riordan, international trade director at the European Automobile Manufacturers’ Association, said the industry had previously forecast that 60% of batteries across all segments would be made in Europe by 2027. Current expectations are much lower, with EU battery production estimated at “just under 20%” by 1 January 2027. The UK is expected to be higher, but still short of the required thresholds.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said: “Battery supply chains are still not ready to meet these stringent requirements, which were based on assumptions that have not materialised despite major investment.”
He added: “The UK and EU must now find a pragmatic solution that avoids self-defeating tariffs on the very vehicles consumers are being urged to buy, while safeguarding investment in domestic battery capabilities.”
The latest push follows a previous three-year suspension of stricter rules, agreed after carmakers warned that the earlier deadline would raise costs for manufacturers and consumers. That suspension runs until the end of 2026, leaving little time for a further deal before the tariff cliff returns.
Battery production remains one of the hardest parts of the transition to localise. China continues to dominate key stages of the battery supply chain, from component manufacturing to raw material processing, while European and UK projects have been slowed by high costs, long development cycles, and uncertain demand forecasts.
O’Riordan said: “The cost of battery manufacturing is very high, still 30% higher than in China.”
Manufacturers are now facing a collision between industrial policy and market reality. Rules of origin are intended to build European battery capacity, but strict enforcement before that capacity exists could penalise the same companies expected to drive the shift to electric vehicles.
The potential tariff would also arrive as consumer demand remains uneven. Electric vehicle adoption is being supported by regulation, fleet purchasing, and product launches, yet upfront prices, insurance costs, charging access, and residual values continue to shape buyer behaviour. A tariff increase would make that transition more difficult for manufacturers, retailers, leasing providers, and commercial fleet operators.
The UK’s exposure is particularly acute because of the importance of the EU as an export market. British-built vehicles depend on tariff-free access to Europe, while the domestic market also relies heavily on imported electric models. Any disruption to trade terms would therefore affect both sides of the UK automotive balance sheet.
The debate is also being sharpened by competition from China. Lower-cost Chinese electric vehicles and battery components have already altered pricing dynamics across Europe, forcing established manufacturers to defend market share while funding large transition programmes. A tariff barrier between the UK and the EU would add cost inside a region already trying to compete with cheaper imported models.
European leaders are due to discuss China in June, with trade, industrial capacity, and state support expected to feature heavily. The EV rules-of-origin dispute sits inside that wider question of how Europe protects strategic manufacturing without slowing the uptake of low-emission vehicles.
The European Commission has said talks can continue within the framework of ongoing EU-UK negotiations and that it remains in contact with stakeholders to assess industry preparedness. The next phase will determine whether policymakers extend flexibility again, redesign the rules, or allow the stricter regime to come into force.
Battery localisation remains a strategic objective for both the UK and the EU. The industry’s argument is that a tariff deadline cannot substitute for the physical capacity, capital investment, and raw material security required to deliver it.
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