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UK carmakers warn no-deal brexit may undermine climate goals

Siddharth Philip
Bloomberg

U.K. carmakers warned that a no-deal Brexit could jeopardize the government’s plans to cut carbon emissions by reducing demand for electric vehicles.

A failure of negotiators to reach a trade agreement would mean a reversion to World Trade Organization tariffs, which would raise the price of European Union-made EVs sold in the U.K. by 2,800 pounds ($3,700), the Society of Motor Manufacturers and Traders said in a statement Thursday.

WTO terms would also add about 2,000 pounds to the cost of U.K. electric vehicles exported to the European Union, making them less competitive, the trade group said. SMMT estimates the new levies could lead to a 20% drop in demand for the cars.

Britain's Prime Minister Boris Johnson holds an electric vehicle charging cable during a visit to the headquarters of Octopus Energy in London, Monday Oct. 5, 2020.

The U.K. set a deadline of 2040 to end sales of gasoline and diesel-powered vehicles, and is consulting on moving this date to 2035 or earlier. The EU’s goal of achieving climate neutrality by 2050 will include stricter emissions caps for cars and tighter energy efficiency standards for buildings, though officials are discussing a more aggressive emissions-reduction target for 2030.

With negotiators set to resume talks over the terms of Britain’s departure, carmakers from both sides have been piling pressure on governments to ensure a free trade agreement. The SMMT called on the U.K. to raise subsidies for EVs and cited the higher amount of support available in other countries. Germany, for example, offers as much as 9,000 euros ($10,600).

“Just as the automotive industry is accelerating the introduction of the latest electrified vehicles, it faces the double whammy of a coronavirus second wave and the possibility of leaving the EU without a deal,” said Mike Hawes, the chief executive of the SMMT. “We urge all parties to re-engage in talks and reach agreement without delay.”