EU may delay the 10% tariff on UK-built EVs due 1 January 2027
Why forwarders should not plan for a January EV tariff cliff
The EU is reportedly set to delay a 10% tariff on electric cars made in the UK. The tariff was due to apply to most electric vehicles from 1 January 2027. Reuters reported the move on 12 November, citing the Financial Times and people familiar with the matter. Reuters said it could not immediately verify the report. It added that Brussels is consulting industry on postponing the tariff. The European Commission and the British government did not immediately respond to requests for comment.
Our view is simple. A delay is now the most likely outcome, and the 1 January cliff edge is fading. Forwarders and shippers should not pay premium rates or block extra ro-ro space for a December rush that probably will not be needed. But they should keep a fallback ready until there is a signed legal text, because a newspaper report is not a law.
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What the tariff is and why it bites
The rule sits in the Trade and Cooperation Agreement (TCA), the post-Brexit trade deal between the UK and the EU. The TCA lets goods cross with zero tariffs, but only if they meet “rules of origin”. These rules decide how much of a product’s value must come from the UK or EU for it to count as local.
For electric vehicles, those thresholds step up on 1 January 2027. According to Reuters, an EV then needs at least 55% of its value from the EU or Britain to qualify. Battery cells and modules need 65%. Battery packs need 70%. A vehicle that falls short pays a 10% tariff.
The problem is the battery. Most EV batteries are still made outside Europe. In June, Jonathan O’Riordan, director of international trade at the European carmakers’ association ACEA, estimated that “only 20% of electric vehicle batteries will be produced in Europe” by the end of 2026/27, electrive reported. If most batteries come from outside Europe, hitting 65% or 70% local value in the battery is very hard. And because the battery is a large share of an EV’s value, it drags the whole car below 55%.
The numbers behind the pressure
The UK car lobby, the Society of Motor Manufacturers and Traders (SMMT), has been loud on this all year.
At its summit in London on 30 June, SMMT said the tariff would hit 70% of battery-electric and plug-in hybrid models traded with the EU, Reuters reported. SMMT put the bill at £1.4bn. Automotive Logistics, reporting the same event, said that figure is per year, on about £16.4bn of annual UK–EU trade in electrified vehicles.
SMMT chief executive Mike Hawes said then: “the last thing we need is additional costs of that trade, so we need a joint solution.” Earlier in June, electrive quoted him saying: “Battery supply chains are still not ready to meet these stringent requirements.”
The EU side said the same. ACEA and SMMT jointly asked for a further delay in June, electrive reported. A Commission spokesperson replied that the issue could be discussed “within the framework of ongoing EU-UK negotiations”. That was a door left open, not a refusal.
The stakes for the UK are large. SMMT figures reported by CGTN on 30 October show exports made up more than three-quarters of UK vehicle production in September, and the EU took 57.5% of those exports.
We have been here before
This is the second time the same cliff edge has come close. The TCA first planned to tighten the EV rules on 1 January 2024. In December 2023 the UK and EU agreed to keep the existing rules for three more years, to the end of 2026. Just Auto reported the deal on 21 December 2023, less than two weeks before the deadline.
The reasons given then were the pandemic, the war in Ukraine, and European battery plants arriving later than planned. Those reasons have not gone away. ACEA estimated the 2023 delay avoided €4.3bn in tariff costs and saved about 480,000 EVs of production. Hawes called it “a win for motorists, the economy and the environment.”
Two lessons from last time matter for logistics. First, the fix came late. Anyone who waited for certainty had only days of notice. Second, the fix was a simple extension of the existing rules, not a rewrite. That made it easy to apply at the border, with no new paperwork.
What a delay means for forwarders
Start with finished vehicles. Many cars between the UK and the continent move on ro-ro ships, short for roll-on/roll-off, where vehicles are driven on and off. They also move as freight on short-sea and Channel routes. A firm tariff date usually triggers a pull-forward: carmakers rush stock across before the duty starts, then volumes drop in January. That squeezes ro-ro decks, port compounds and truck capacity in December, then leaves them slack.
If the delay is confirmed, that pull-forward should not happen. In our view, December finished-vehicle volumes on UK–EU lanes should look like a normal December. Forwarders who have quoted surge rates or held extra space should be ready to release it.
Next, batteries and parts. UK and EU car supply chains are tightly linked. Parts often cross the border several times before a car is finished, Chamber International noted in June. Every crossing depends on suppliers proving origin. A delay keeps today’s thresholds and today’s supplier declarations, the documents a supplier signs to state where a part’s value comes from. That means no rush to rebuild origin files before January.
Third, sourcing decisions. A delay is a reprieve, not a solution. The thresholds are still written into the TCA. Carmakers will keep shifting battery sourcing towards European plants to meet them later. Over time that should mean more cell and pack movements from European battery plants to UK assembly lines, and fewer from outside Europe. Forwarders that handle batteries, which ship as dangerous goods, should watch which plants their customers sign with.
There is a second threat beyond tariffs. The EU’s proposed “Made in Europe” rules, part of the Industrial Accelerator Act published in March 2026, could favour EU-made vehicles in public procurement and subsidies, Automotive Logistics reported. Hawes said: “Britain was written out of Made in Europe.” A tariff delay does nothing about that. It is the next fight.
What could still go wrong
Three things could knock this off course.
The first is that the report is unconfirmed. Reuters said plainly it could not verify the FT story, and neither the Commission nor the UK government commented. Until one of them does, the 1 January date is still the law.
The second is the price. Brussels may want something back for a delay, or may tie it to the wider EU–UK talks the Commission spokesperson mentioned in June. SMMT has already framed the coming EU–UK summit as the place to agree “pragmatic solutions”, CGTN reported. A delay bundled into a bigger deal can slip if the bigger deal stalls.
The third is the form. A short delay, say one year, would bring the same cliff edge back in late 2027. A delay with conditions, such as a phased step-up in thresholds, could change paperwork even if no tariff is charged. Forwarders should read the final text, not just the headline, before telling customers nothing changes.
None of these, in our view, outweighs the pressure from both industries and the 2023 precedent. But they are why a fallback plan still makes sense.
What to do now, and our call
Do not lock in December surge capacity on the strength of this report alone. Talk to vehicle and parts customers about whether they still plan a pull-forward, and agree release terms for any extra space.
Keep origin files current. If the delay fails, January shipments that miss the new thresholds pay 10%. Know which customers’ models are at risk.
Watch for the legal text. The 2023 extension was agreed by both sides and announced days before the deadline. A Commission proposal or a joint UK–EU announcement is the signal that matters, not press reports.
Our call: the EU and UK formally agree to delay the tighter EV rules of origin before 31 December 2026, most likely by extending today’s rules rather than writing new ones. As a result, we expect no large December surge in UK–EU finished-vehicle shipments, and no 10% tariff charged on UK-built EVs entering the EU in January 2027. If no legal text appears by mid-December, we would treat the cliff edge as live again and expect a late, compressed rush in the final two weeks of the year.
Sources
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