Under current arrangements, electric vehicle products moving between the UK and the EU are subject to a 10% tariff if their value from the region is less than 45%.The policy is designed to encourage the development of a European battery supply chain.

But carmakers, the UK and the vast majority of EU member states have been pushing for the measure to be delayed until 2027 because local battery supply chains are not ready.France, however, has long refused to extend the tariffs outright, preferring other options to mitigate their impact on the industry. France had said in recent weeks that it was willing to find a flexible solution.

The proposal for a three-year delay will first need to be approved by EU governments before a decision is taken with the UK government. Another person familiar with the matter said that if EU commissioners approve the proposal to delay the imposition of tariffs, member states will discuss it in the coming days.

Bloomberg has previously reported that the EU is also studying a 12-month buffer period. Under the program, it is expected that the EU’s domestic battery production efforts will speed up next year, when automakers may be able to shift their products to specific export destinations, such as the United Kingdom, which has stricter requirements. However, this is no guarantee that electric vehicles entering production in 2024 and 2025 will not be affected by the tariffs, nor will all manufacturers be able to adjust their supply chains in time to meet the requirements.

A lobby group representing automakers such as Volkswagen and Renault has warned that the tariffs could cost the auto industry €4.3 billion over the next three years, with Chinese brands set to benefit. In months of debate around the issue, the EU has been searching for a solution that would both protect the auto industry and incentivize more local battery production.

On Dec. 5, Jaguar Land Rover welcomed the proposed tariff deferral, saying in a statement that it would “provide the industry with the necessary time to scale up procurement and create a European battery industry, and avoid immediate tariffs on electric vehicles”

The UK automotive trade lobby had warned that the tariffs would add around £3,600 to the cost of a UK-built electric car sold in Europe and around £3,400 to the average cost of an EU-built electric car sold in the UK.