EV makers could face a £3.7bn bill unless the EU changes tack on the introduction of trade tariffs.

According to the European Automobile Manufacturers’ Association (ACEA), production could be hit by up to 480,000 vehicles in three years unless the so-called “rules of origin” regulations are abandoned.

ACEA is making an urgent plea to the European Commission to act immediately to prevent taxes being imposed on electric vehicles from January 2024.

If the Commission fails to act, a pointless 10 per cent tariff will be placed on EV exports either way between the UK and the EU because of the need to source batteries and other components from outside countries.

Under ‘rules of origin’ the only way to avoid these duties will be to source all battery parts and some critical battery material in the EU/UK, with neither being ready to produce the required numbers.

“Driving up consumer prices of European electric vehicles, at the very time when we need to fight for market share in the face of fierce international competition, is not the right move – neither from a business nor an environmental perspective,” stated Luca de Meo, ACEA president and CEO of Renault Group. “We will effectively be handing a chunk of the market to global manufacturers.”

Massive investments are being made in EU and UK battery supply chains, but it is unlikely that volume production will be at a level needed to meet the rules of origin.

ACEA represents the 14 major Europe-based car, van, truck and bus makers: BMW Group, DAF Trucks, Daimler Truck, Ferrari, Ford of Europe, Honda Motor Europe, Hyundai Motor Europe, Iveco Group, JLR, Mercedes-Benz, Renault Group, Toyota Motor Europe, Volkswagen Group, and Volvo Group.

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