The world’s largest manufacturer urged the government to rework part of the Brexit agreement or lose its auto industry.
Stellantis, which owns Vauxhall, Peugeot, Citroen, and Fiat, had pledged to manufacture electric vehicles in the United Kingdom but now claims that this is in jeopardy.
It stated that it can no longer comply with Brexit trade regulations regarding the origin of parts.
A government spokesperson stated that the United Kingdom is “determined” to remain competitive in the automobile manufacturing industry.
“If the cost of manufacturing electric vehicles in the United Kingdom becomes uncompetitive and unsustainable, operations will cease,” stated Stellantis.
It is the first time an automaker has explicitly called for a Brexit trade pact renegotiation.
It demanded that the government reach an agreement with the EU to maintain current regulations until 2027. Also a review of manufacturing arrangements in Serbia and Morocco.
Two years ago, the fourth-largest automaker said its Ellesmere Port and Luton operations were safe.
In response to a “threat to our export business and the viability of our UK manufacturing operations.” Stellantis has requested that the UK government renegotiate a portion of the Brexit agreement.
In a response to a Commons inquiry into the production of electric vehicles, the company stated that its UK investments were contingent on fulfilling the strict terms of the post-Brexit free trade agreement.
These regulations stipulate that beginning the following year, 45% of the value of an electric vehicle must originate in the United Kingdom or the European Union to be eligible for duty-free commerce, with this percentage eventually rising to 65%.
Stellantis said it was “now unable to meet these rules of origin” due to the pandemic and energy crisis rising raw material prices.
If the government is unable to secure an agreement to maintain the current standards until 2027, “trade between the United Kingdom and the European Union would be subject to 10 percent tariffs beginning in 2020,” the document states.
It was stated that this would render domestic production and exports uncompetitive compared to Japan and South Korea.
Stellantis remarked that the UK must review its trading arrangements with Europe to maintain its manufacturing plants.
According to a government spokesperson, Business and Trade Secretary Kemi Badenoch “has raised this issue with the EU.
Ms. Badenoch, who will meet with Stellantis executives today, is “committed to ensuring the United Kingdom remains one of the best locations for automotive manufacturing, particularly as we transition to electric vehicles,” according to a spokesperson.
The government has established a fund to develop the supply chain for electric vehicles. And in the coming months, it will take “decisive action” to guarantee future investment in the production of zero-emission vehicles.
However, Labour’s shadow business secretary Jonathan Reynolds stated that manufacturers were let down by a “chaotic government.”
He stated that “the crown jewel of British manufacturing is in jeopardy without immediate government action.” And promised that Labour “will work with industry to build the gigafactories we need.”
‘Uncompetitive’
Boris Johnson and Ursula von der Leyen’s 2020 Brexit negotiations concluded with electric vehicles and batteries.
The Stellantis report warns that if electric vehicle costs remain uncompetitive, “manufacturers will cease investing” and “relocate manufacturing operations outside the UK.”
Ford, BMW’s electrified Mini, and Honda’s US investment after closing its Swindon plant are next.
The UK needs battery infrastructure and a supply network, but foreign advances are outpacing it.
The US, China, and EU are subsidising this market during the UK’s unclear trading arrangements.
The industry fears the UK may miss a once-in-a-generation investment wave in car electrification.
Gigafactory
Musk told Macron he may invest in a French battery gigafactory this week.
Jaguar Land Rover, the largest manufacturer in the United Kingdom, is presently being courted by the Spanish government to host a gigafactory that had long been assumed to be constructed in the United Kingdom.
Andy Palmer, a former chief operating officer at Nissan and chairman of battery start-ups Inobat and Ionetic, told. “We are running out of time” to get battery manufacturing in the UK.
“It is practically impossible to meet those [EU] local content rules unless you source your battery from a plant in the United Kingdom or the European Union,” he told Radio 4’s Today program.
He added that the cost of failure was evident: “It’s 800,000 jobs [lost] in the United Kingdom, which is essentially jobs associated with the automobile industry.”
David Bailey, professor of business economics at the Birmingham Business School, concurred, stating, “If we do not mass-produce batteries in the United Kingdom, we will not have a mass-market automobile industry.”
He added that although the government of Boris Johnson desired the construction of a “gigafactory” in the United Kingdom. “There is no industrial policy to back that up.”
The Brexit trade agreement permitted a “phase-in” of the strict origin regulations for electric vehicle components.
If UK automakers struggle to meet origin standards in 2019, the EU may renegotiate.
However, the requirements are embedded in the UK-EU treaty.
The rules will be tightened again in 2027, and insiders believe that without UK battery production. It will be impossible for UK exporters to export vehicles tariff-free at that time.
