The European Commission looks set to propose a three-year delay to a 10% tariff on sales of electric vehicles between the EU and the UK, in a major boost for car industries across Europe.

Duties were due to kick in on 1 January 2024 but all the major carmakers in the UK and Europe including BMW, Volkswagen and Stellantis have been lobbying for a temporary reprieve.

Stellantis, which is responsible for 14 brands including Vauxhall and Jeep, warned it might have to close operations in Britain with the loss of thousands of jobs if the tariff came into force in January.

The proposal will go before the full cabinet of European commissioners tomorrow where it is expected to be approved.

At the same time the European Commission is proposing a €3bn (£2.57bn) fund for the battery industry to help accelerate the production of homegrown electric vehicles.

France had objected to the suspension of the tariff arguing it was wrong to reopen the Brexit trade deal and to give the car industry any protection when it had been slow to develop its EV production.

The EU and the UK agreed the tariff regime back in 2020 when the trade and cooperation deal was sealed and at a time when European manufacturers felt they would have long enough to ramp up production of EVs.

However, the pandemic provided a huge setback with manufacturers protesting that China has now been handed the advantage with its share of the EV market doubling over the last two years.

The EU has also announced an investigation into claims of state subsidies of Chinese EVs.