An electric car tariff of 10% could be levied on some models by January 1, 2027. If you’re planning to buy an electric car soon, read on to learn how you might be affected.

 

Thinking of buying a new EV in 2027?

If so, know that any brand new electric model you buy may be subject to a 10% EV tariff.

On the 1st of January 2027, temporary rules exempting EVs from the tariff will expire. That means the headline price for a new electric vehicle could increase.

However, whether or not a particular EV model will be subject to the tariff will depend on:

  • How many of the EV’s components are made/originate from the UK or EU - or
  • Whether the UK government can extend current rules - or negotiate a new zero-tariff agreement

 

I have my eye on a particular EV model: Will it cost 10% more?

First of all, it's important to note that any import tariff will be built into the car’s headline price - you won’t be charged some sort of separate fee.

And how much of this extra cost is passed on to you as the buyer will be up to the dealership; they may absorb some, all or none of the EV tariff.

 

Component origin problem

Then there’s the thorny problem of working out how much of the EV has UK or EU content.

 

The 2020 Brexit deal stipulated that in order to qualify for zero-rated electric car tariff from 1 January 2027:

 

  • 55% of the vehicle has to be of UK/EU origin
  • 70% of the battery pack has to be of UK/EU value
  • 65% of the battery cells have to be of UK/EU origin

 

And determining the origin of components in a vehicle is not always straightforward.

For example, a car’s battery pack might have parts from several factories in different countries, while the raw materials used in those parts may have come from another set of countries.

 

What’s the purpose of the EV tariff?

The idea behind the tariffs - which focus heavily on battery systems - was to stimulate UK/EU battery production. However, today, many of the battery packs/cells used in EVs come from factories a long way from Europe.

 

Is there any UK/EU battery production?

Yes, but it’s quite a bit lower than was hoped. Jonathan O’Riordan, international trade director at ACEA, the European Automobile Manufacturers’ Association, said “just under 20%” of batteries will be made in the EU by January 1 2027.

The level is higher in the UK, but still below targets.

 

“Self-defeating”: The best EV tariffs are zero tariffs

Protecting the UK/EU automotive manufacturing industry has become a priority, especially in the realm of battery systems and components, which is dominated by Chinese factories. China can make these components for a considerably lower price than Europe can, partly because they have control over raw materials - including lithium.

Mike Hawes, chief executive of the UK’s Society of Motor Manufacturers and Traders (SMMT), said that the scheme’s "stringent requirements” would not be met by the deadline.

Hawes said: “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.”

 

So will I be paying 10% more for my new EV next year?

Whether or not the UK/EU can work out a new deal that heads off the 10% tariff remains to be seen. It’s possible - but is far from certain.

If they fail to arrive at a new deal in time, then a 10% tariff may be imposed - depending on the model (and where its components were made).

And how much of any tariff is passed on to you is a decision for the dealership.

 

But price isn’t the only factor

When considering a new EV, it is perhaps wise not to focus entirely on the price.

For instance, it’s a good idea to undertake an electric car charging comparison - both in terms of charging speed and range. You should also look at the feasibility of installing a home-charger, since domestic devices are a lot cheaper than public chargers. Also research the best EV tariffs from electricity providers - critical if you want to save money over the long term.

And read reviews of specific models, paying particular attention to real-world range estimates, access to parts and skilled mechanics, and reliability.