France has emerged as the main roadblock for those seeking to delay post-Brexit tariffs that are set to hit electric vehicles shipped between the U.K. and European Union in a move that could cost automakers billions of euros in revenue.
The French government does not want to delay the levy, which it worries may have the appearance of giving in to U.K. requests, potentially deterring battery investments in the EU, according to people familiar with the deliberations and documents outlining nations' positions.
Most of the EU’s 27 member states — led by Germany — are open to delaying the deadline as a one-off, said the people, who asked not to be identified because discussions on the matter are ongoing.
At stake is whether EVs traded between the U.K. and the EU will attract a 10 percent tariff starting next year if less than 45 percent of their value comes from the region, as stipulated under post-Brexit agreements.
European automakers want to extend the planned phase-in period by three years, allowing more time for the region’s battery supply chain to develop.
The industry has said the move could cost the sector 4.3 billion euros ($4.5 billion) over the next three years and would benefit Chinese competitors.
A spokesperson from the French finance ministry declined to comment.
France is concerned that allowing a delay would send a political signal that a country can get the domestic political gains of leaving the EU’s single market without the costs, according to one French official.