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The UK and EU need to agree a deal to prevent tariffs being applied to EVs, according to the Society of Motor Manufacturers and Traders (SMMT).
The organisation said that EVs which did not meet new rules of origin (ROO) regulations, set to come in on 1 January, would be subject to a 10% tariff when traded between the UK and EU.
It said this could mean an average price hike of £3,400 on EU-manufactured EVs bought by British buyers, and a £3,600 rise on UK-made EVs sold in Europe.
With conventional petrol and diesel vehicles set to escape tariffs, the SMMT said this situation would hamper EV adoption by effectively incentivising the purchase of ICE vehicles.
It has therefore called for the new ROO rules to be delayed by three years.
SMMT chief executive Mike Hawes said: "Our manufacturers have shown incredible resilience amid multiple challenges in recent years, but unnecessary, unworkable and ill-timed rules of origin will only serve to set back the recovery and disincentivise the very vehicles we want to sell.
"Not only would consumers be out of pocket, but the industrial competitiveness of the UK and continental industries would be undermined. A three-year delay is a simple, common-sense solution which must be agreed urgently."
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