By David Sachs

The European Commission plans to delay tariffs on certain electric vehicles exported between the European Union and the U.K. by three years, aligning with the interests of carmakers.

A measure that imposes 10% tariff on electric vehicles with too many parts made outside of the EU or the U.K. was set to start on Jan. 1. The Commission has submitted its proposal seeking a delay to the Council of the European Union, which is expected to make a final decision Wednesday.

The tariff plan was meant to spur the development of Europe's battery industry and shift reliance on battery and other electrification technology away from China and other parts of Asia.

The EU's car industry group, the European Automobile Manufacturers' Association, lobbied for the delay, saying tariffs would cost the industry 4.3 billion euros ($4.64 billion) over three years. The UK is its top export location, said the group, known as ACEA. It welcomed the Commission's proposal and urged the council to approve it.

"This is vital to ensure the well-being of not only EU [battery-electric vehicle] manufacturing, but also of the whole European battery value chain," said Sigrid de Vries, ACEA's director general.

Industry lobbyists from the UK also backed the proposal. "Such an extension would avoid damaging tariffs on the very vehicles we need consumers to buy, allow UK and EU manufacturers to compete with the rest of the world and, crucially, give the European battery industry time to catch up," said Mike Hawes, head of the Society of Motor Manufacturers and Traders.

The EU said the extension is a "one-off" deal and that the revised rules include a clause making another extension illegal.

The Commission also announced up to EUR3 billion in incentives for the EU battery-manufacturing sector.

"It supports the competitiveness of our industry and protects jobs in the EU," said Maros Sefcovic, vice president of the European Commission.

Shares in Europe's major carmakers rose Wednesday. At 1404 GMT, Volkswagen shares were up 4.6%, Renault shares traded 4.2% higher, and Stellantis shares were up 2.7%. Mercedes-Benz shares traded 1.6% higher while BMW stock was up 1.2%.

Write to David Sachs at david.sachs@wsj.com

(END) Dow Jones Newswires

December 06, 2023 10:07 ET (15:07 GMT)

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