Brexit could be ‘incredibly painful’ for UK low-emission vehicle industry

Britain’s supply of electric and plug-in hybrid vehicles could dry up after Brexit as carmakers may lose the incentive to sell low-emission vehicles here, a new report has found.

The analysis by sustainable transport group Transport & Environment found that the UK was the third largest market for zero emission vehicles in the EU last year, and the largest for plug-in hybrids. But as British sales of these cars will no longer count towards carmakers’ EU CO2 targets after Brexit, they may decide not to sell them in the UK at all.

The report states that there are currently significant supply constraints in providing electric vehicles to the EU market. Brexit could see other European countries being prioritised for electric vehicle deliveries as selling these cars in EU member states will count towards achieving their targets and avoiding fines. As a result, the UK may also struggle to meet its 4th carbon budget, which is already ‘at serious risk of being missed due to rising transport emissions.’

Cécile Toubeau, better trade and regulation director at T&E, said: ‘The UK’s departure from the EU and the single market will mean that Britain will no longer count towards the overall targets for vehicle CO2 emissions. Carmakers may simply opt to dump their less efficient models in the UK market.’

For EU countries, Brexit should not have a significant impact on compliance with the 2020-2021 car CO2 emissions targets. T&E’s analysis, based on the European fleet average emissions excluding the UK, shows that there will be little to no impact compared to the overall EU-28 fleet average emissions.

Jaguar-Land Rover would actually meet its CO2 target earlier as the vehicles it sells in the UK, which would no longer count, are higher emitting on average than its EU sales. Ford, Honda and Hyundai, which are already on track for late compliance, would see their CO2 compliance delayed by one year.

Meanwhile, a hard Brexit risks cars manufactured in Britain becoming 10% more expensive when sold abroad if they have to be traded under World Trade Organisation (WTO) tariffs. Vehicle components would be 4.5% more expensive.

This would mean that cars imported into the UK will also become more expensive due to WTO tariffs. The report says this loss of competitiveness, along with the administrative burden and delays linked to increased customs checks, could be a strong incentive for manufacturers relocating to the EU. That could cost up to 6,700 British auto workers their jobs – about one-tenth of the workforce currently employed by carmakers.

Read the report here.