FirstFT: Carmakers warn on EU tariffs threat to electric vehicle prices

Carmakers have warned that the prices of many electric vehicles made or sold in the UK and Europe could jump 10 per cent or more from 2024 after Brussels said it would not extend tariff exemptions agreed in the Brexit trade deal.

The UK-EU Trade and Cooperation Agreement temporarily exempted EVs from rules stating that products must be substantially made in Britain or the bloc to qualify for the EU’s zero tariff, zero quota regime because such a large proportion of EV batteries are imported from Asia.

Both EU and UK car manufacturing groups are asking for the rules of origin exemption to be extended from December 31 2023 because there are not enough batteries and precursor chemicals currently being made in Europe.

If London and Brussels do not agree a change, many EVs moving between the two would pay 10 per cent tariffs, increasing prices for consumers.

“The European battery industry is simply not taking off quickly enough to keep in line with more restrictive rules,” said a spokesperson for the European Automobile Manufacturers Association, which represents EU carmakers.

“What is more, given the recent spike in prices of raw materials — which make up most of the non-European content of a battery — it is becoming increasingly challenging to meet the rules of origin for batteries.”

Five more stories in the news

1. UK finalises plans for regulation of ‘wild west’ crypto sector The Treasury is finalising plans for a package of sweeping rules to regulate the cryptocurrency industry. The plans include limits on foreign companies selling into the UK, provisions for how to deal with the collapse of companies and restrictions on product advertising.

2. Start of Russian oil cap causes tanker traffic jam A traffic jam of oil tankers has built up in Turkish waters after western powers launched a “price cap” targeting Russian oil and as authorities in Ankara have demanded insurers promise any vessels navigating its straits are fully covered.

3. Chinese battery makers set to dominate Europe’s car industry China is becoming the battery workshop of the world and European industry executives and policymakers are worried. By 2031, China is projected to have more production capacity in Europe, the second-biggest market for electric cars, than any other country.

4. KLM encourages passengers to take the train The Dutch flag carrier’s chief executive Marjan Rintel says passengers should take the train on some short-haul journeys to help cut carbon emissions, telling the Financial Times that airlines should stop viewing rail as a competitor.

5. Global chip battle book wins FT prize Chris Miller has won the Financial Times Business Book of the Year Award for Chip War, his account of the global battle for semiconductor supremacy and how manufacturers came to rely on advanced chips from a handful of companies. Recent global tensions and supply chain difficulties have underlined the timeliness of Miller’s analysis, the award judges said.

The day ahead

Economic data The British Retail Consortium reports November retail sales, and Germany has October factory orders. S&P Global releases its November construction purchasing managers’ indices for Germany and the UK in conjunction with Cips.

Corporate earnings British industrial equipment rental company Ashtead Group reports its second-quarter earnings.

EU-western Balkans summit The first gathering of EU and western Balkan leaders begins in Tirana, Albania.

US Senate runoff in Georgia Voters go to the polls in a contest between incumbent senator Raphael Warnock and Republican opponent Herschel Walker. Democrats will seek to expand their majority in the Senate.

Join us online for FT Advancing Sustainability in the Service Sector today. Speakers include Infosys vice-president Mitrankur Majumdar, Swissport International chief strategist Nadia Kaddouri and more. Register for free here.

What else we’re reading

Germany confronts a broken business model For years, Germany’s business model has been predicated on low-cost energy guaranteed by a plentiful supply of Russian gas. Now, companies are suffering the consequences. Can the country’s industrial economy reinvent itself without cheap gas from Russia?

NHS nurses say job they love is exacting too high a price As nurses in England and Wales gear up for their union’s first strike in more than a century, many struggle to make ends meet. While many love their jobs, they sometimes feel caught between the needs of their families and of their patients — and worry they are not fully meeting either. Increasingly the question is: “Is it really worth it?”

Australia, China and the judgment of the Solomons Despite their remoteness, the Solomon Islands have become an unlikely flashpoint in the growing strategic rivalry between China and the west, writes Gideon Rachman, with the signature of a security pact between the Solomons and China sparking alarm in Washington and Canberra.

Why HR needs to go back to basics Too many leaders have been tempted to think that a book club, meditation app or weekly yoga session will be enough to make their restive troops more loyal. But post-Covid and in a tight labour market HR departments are overwhelmed. If they can get the basics right, they might have to spend less time and energy on hollow perks, writes US business editor Andrew Edgecliffe-Johnson.

Do you really want to live to be 100? “Healthy life expectancy” is probably a better measure of what people actually want than longevity, writes Sarah O’Connor, but the situation in the UK is not looking good. In the years before the pandemic, healthy life expectancy had stagnated for men at 62.9 years and had begun to fall slightly for women to 63.3 years.

Crossword

Do you know who the manager of Manchester United was from 1981-86? Try your luck at 33-across in this week’s Polymath crossword puzzle.