German carmakers warn of tough EU talks on post-Brexit EV trade

Germany’s automaking lobby warned of difficult discussions with the European Commission to reshape incoming trade rules between the UK and the European Union that threaten to make electric vehicles more expensive.

From next year, 45% of an electric vehicle’s value must be sourced in the UK or elsewhere in Europe to avoid export tariffs of 10%. The industry won’t be ready to meet this threshold because Europe’s battery supply chain is still ramping up, according to the VDA lobby, which represents the likes of Volkswagen AG and BMW AG.

“We don’t have enough batteries here to fulfill these rules,” VDA President Hildegard Mueller said Wednesday in an interview with Bloomberg Television. “We’re having difficult talks and we are working to inform about the consequences.”

Carmakers including Stellantis NV and Mercedes-Benz AG have warned about the detrimental effect of the post-Brexit trading arrangements. Nissan Motor Co., the UK’s largest automaker by volume, has said assembling cars in Britain may become too expensive after the rules kick in. While the UK is a significant vehicle exporter, it’s also a lucrative market for cars made in the EU.

London has asked for a delay of the terms under the post-Brexit Trade and Cooperation Agreement to 2027, by which time battery makers such as Northvolt AB and Contemporary Amperex Technology Co. with sites in Sweden and Germany are set to be up and running at scale.

The European Automobile Manufacturers Association, another industry group, estimates that EU-based companies will pay €4.3 billion ($4.7 billion) in tariffs and lose sales between 2024 and 2027, director-general Sigrid de Vries told the Financial Times.

Last month, several EU officials with knowledge of the talks said there has been no major breakthrough so far, following comments by UK Business and Trade Secretary Kemi Badenoch of an imminent resolution.