The Society of Motor Manufacturers and Traders (SMMT) has said that tougher new UK-EU Rules of Origin begin on 1 January 2024, and that failure to postpone them would see electric vehicles traded both ways incur tariffs1. The industry body set out the position in its November new car registration release, published on 5 December 2023, which reported that carmakers and governments on both sides of the Channel have called for the current EV battery rules to be retained for a further three years1.
The SMMT said the change would raise prices for consumers "at a critical moment in the transition"1. It described the need to delay the rules as "even more urgent" than other measures it raised, and said that with less than four weeks to go before they take effect, a "common sense approach" was being sought1.
"Even more urgent is the need to delay tougher new UK-EU Rules of Origin which will begin on 1 January 2024. Failure to postpone these rules would see EVs traded both ways incur tariffs that would raise prices for consumers at a critical moment in the transition."
The release also carried November market figures. The UK new car market grew by 9.5% in November to 156,525 units, down just 96 units (-0.1%) on November 20191. Fleet registrations rose 25.4% to 93,049 units, or 59.4% of the market, while private demand fell 5.9% to 60,506 registrations and business uptake fell 32.7% to 2,970 units1. Year to date the market was up 18.6% at 1.762 million units1.
Battery electric vehicle volumes fell 17.1% in November to a 15.6% market share, from 24,359 new BEVs reaching the road, of which 77.4% went to fleets and businesses1. The SMMT said last November was atypical because of significant deliveries following supply chain disruptions1. Year to date, BEV uptake is up 27.5% with a 16.3% market share, expected to rise to 22.3% next year1.
| November 2023 measure | Figure |
|---|---|
| Total new car registrations | 156,525, up 9.5% |
| Fleet registrations | 93,049, up 25.4% (59.4% of market) |
| Private registrations | 60,506, down 5.9% |
| Business registrations | 2,970, down 32.7% |
| New BEVs | 24,359, down 17.1% (15.6% share) |
The SMMT also noted that new regulation comes into force in January requiring 22% of each manufacturer's new vehicle registrations to be zero emission1. It said sustained recovery depends on fiscal incentives for consumers and greater investment in charging infrastructure, and repeated its calls to halve VAT on new BEVs and cut VAT on public charging to 5% in line with home charging1.
Why it matters for households
Rules of Origin determine how much of a vehicle's value must originate in the UK or EU for it to trade between the two without a tariff. The SMMT's position is that the January change would make EVs traded in either direction subject to tariffs, and that those tariffs would raise prices for consumers1. For a household weighing an electric car, that bears on the purchase price rather than on domestic running costs, which depend on the electricity tariff the home is on. Buyers comparing running costs can check electric vehicle energy tariffs in the UK and whether they are eligible for an EV tariff; households with solar and batteries have separate import tariffs designed for solar and battery homes, and export rates are set out in which Smart Export Guarantee tariffs pay the highest export rate. What a home can actually take is limited by its meter, covered in which tariffs your meter and home allow. The SMMT release does not quantify the size of any tariff-driven price increase, and no figure for that has been reported1.
What happens next
The Rules of Origin change is scheduled to begin on 1 January 20241. The SMMT said carmakers and governments on both sides of the Channel have called for the current EV battery rules to be retained for a further three years1. Whether that deferral is agreed is not stated in the release, and no decision has been reported there1. The zero emission mandate requiring 22% of each manufacturer's new registrations to be zero emission also comes into force in January1.