By directors Punim Anda and Chris Lewis at UK law firm Burges Salmon 

Should UK businesses consider asking the Trade Remedies Authority (TRA) to launch an investigation into the import of cheap electric vehicles from China?

As the electric vehicle market continues to grow, the influx of Chinese-made EVs into the UK has raised concerns. Should UK businesses consider asking the Trade Remedies Authority (TRA) to launch an investigation into the import of cheap electric vehicles from China? Let’s delve into the key aspects of this issue.

The current landscape

As of the end of January 2024, there are approximately 1,000,000 fully electric cars on UK roads, along with an additional 600,000 plug-in hybrids. In 2023, over 452,000 plug-in hybrid and battery-electric cars were registered, showing a 41% growth from the previous year. In January 2024, 23.1% of all new car registrations were either fully electric or plug-in hybrid.

The UK automotive industry has made strides in EV production with popular models such as the Mini Electric and Nissan Leaf both produced in the UK but China remains the world’s largest producer of EVs. According to recent reports, the Society of Motor Manufacturers and Traders (SMMT) estimates Chinese-owned brands currently account for 10% of the UK’s new EV market but this could be due to grow as Chinese EVs costing as little as £8,000 may become available in the UK.

The European Commission has already launched an anti-subsidy investigation into Chinese EVs. Post-Brexit, the UK set up the Trade Remedies Authority to regulate tariffs and disputes now that we no longer have the EU undertaking this on our behalf. The TRA does not need to wait for the UK government to request an investigation be launched, it can do so at the request of British businesses and trade bodies.

Pros and cons of applying tariffs

Pros:

Protecting domestic industry: Tariffs can shield UK-based EV manufacturers, and the jobs they create, from unfair competition.

Creating a level playing field: Trade remedies help contribute to a balanced global trade environment.

Cons:

Consumer Impact: Tariffs may increase prices for consumers.

Wider transport sector: Industries that rely on income from the EV sector may be hindered.

Trade Relations: Imposing tariffs could strain trade relations with China.

All of these factors and more would be considered as part of a TRA investigation.

Environmental implications

An increase in EVs can help reduce UK emissions, but their environmental impact depends on factors such as materials used, manufacturing processes and energy sources. A TRA investigation should assess these aspects as part of the Economic Interest Test and the imports may also be subject to charges under the Carbon Border Adjustment Mechanism (CBAM) when it comes into effect in the UK in coming years.

Affected stakeholders and wider transport sector impact

Beyond car manufacturers and consumers, the wider transport sector will also be impacted.

Battery technology: EVs drive innovation in battery technology, software development, and vehicle design. Research and development in these areas contribute to economic growth and enhance the UK’s global competitiveness.

Charging infrastructure: The transition to EVs necessitates the development of charging infrastructure. Companies invest in designing, building and maintaining charging stations, creating jobs and boosting local economies.

Fleet owners: Electrifying existing vehicle fleets (such as company cars and taxis) contributes to a second-hand EV market. Affordable second-hand EVs improve accessibility for consumers, supporting economic inclusivity.

Energy producers and grid capacity: EVs impact the energy sector by increasing demand for electricity.

Manufacturing supply chains: Wider supply chains in the UK could be impacted with everything from steel to coolant and touchscreens to headlights needed to manufacture EVs.

Why get involved with a TRA investigation

The TRA relies on input from affected businesses and trade bodies to make its decisions so it’s vital that interested parties engage with the process. Initiating or responding to an investigation is your chance to have a say on how these measures affect UK business’s profits or market share.

How Burges Salmon can help

The Trade team at Burges Salmon have been closely monitoring TRA investigations and working with the authority to understand its processes and how we can best guide our clients through an investigation. If you’re interested in finding out more about how we may be able to assist you in dealing with the TRA and protecting your interests then contact Punim Anda or Chris Lewis.