EU tariffs on electric vehicles that are sold to, or imported from, the UK will be delayed for three years, the European Commission has proposed.
It comes after carmakers on both sides of the Channel warned they were not ready for the change to post-Brexit trade rules planned from January.
The changes were meant to protect the EU car industry, but the 10% tariffs were likely to lead to huge costs.
EU member states still need to approve the Commission’s plan.
It said the “one-off extension” would protect the bloc’s car industry which was still struggling with the impacts of the pandemic, Russia’s invasion of Ukraine, and competition from US subsidies.
It added that battery production – key to the region’s electric car industry – had been slower than expected.
EU “rules of origin” due to come in from January would have required that EU-produced electric cars were largely made from locally sourced parts.
This would have applied to shipments of cars across the Channel under the terms of the Brexit deal, the UK-EU Trade and Cooperation Agreement.
The rules were designed to protect the European industry from cheap imports, and would effectively have meant that electric vehicles would need to have batteries produced in either the UK or the EU.
Cars which did not meet the criteria would face 10% tariffs when transported across the Channel, in either direction.
But carmakers in both the EU and UK had warned that many would struggle to meet the new criteria, with battery production not being ramped up as fast as expected.
Industry bodies warned the rules would cost European manufacturers £3.75bn over the next three years.
There were also fears that steep tariffs could make electric cars more expensive to produce and potentially push up prices.
The UK government had called for the rules to be postponed.
The UK is by far the largest export market for European manufacturers, with 1.2 million vehicles being delivered to UK ports last year. At the same time the UK sells more cars to the EU than any other region.
Although it has proposed a three-year delay to the rules, the European Commission said it would add a clause to the Brexit trade deal making it “legally impossible” for the extension to last any longer. This, it said, would lock in the rules of origin from 2027.
The Commission also said it would provide €3bn in funding over the next three years to help boost European battery manufacturers.
