UK car lobby group warns of £1.4 billion hit from post-Brexit rules

By Muvija M and Nick Carey

LONDON, June 30 (Reuters) - British electric vehicle makers will have to pay £1.4 billion ($1.85 billion) in tariffs if there is no solution on local content requirements with the European Union, the country's main car lobby group estimated on Tuesday.

The post-Brexit rules on the sourcing of parts, which was delayed once in 2023 and is now due to take effect from January, will trigger a 10% tariff on 70% of battery electric and plug-in hybrid models traded with the EU, the Society of Motor Manufacturers and Traders (SMMT) said.

The British-EU battery electric and plug-in hybrid vehicle trade - estimated at £16.4 billion - faces a risk from such an enforcement, which the SMMT says would make "many of these crucial models less competitive and less affordable".

The warning also comes amid political uncertainty after Prime Minister Keir Starmer's resignation, as it remains to be seen whether his likely successor, former Greater Manchester mayor Andy Burnham, will maintain his approach to EU relations.

"With global competition (more) fierce than ever, the last thing we need is additional costs of that trade, so we need a joint solution," SMMT CEO Mike Hawes told reporters at a briefing in London.

The government did not comment directly on the SMMT's calculation but said they were committed to supporting British carmakers.

Britain and the EU are each other's largest export market for EVs, with targets in both Brussels and London to phase out combustion engine models in the 2030s. The EU has already backed away from an effective 2035 ban on diesel and petrol cars as EV sales have not risen as quickly as originally expected.

The previous extension had come after some carmakers threatened to close their plants in Britain.

Further uncertainty has been created by the European Commission's 'Made in EU' proposal, which Hawes said would "effectively shut out" UK-assembled vehicles from most European markets.

"It's not just a UK problem ... it will damage the UK and will also damage Europe itself," he added.

(Reporting by Muvija M and Nick Carey; Editing by Thomas Derpinghaus and Raju Gopalakrishnan)