Carmakers Call on Britain to Revise Rules on Batteries, Threatening Electric Vehicle Production
Major global car manufacturers, including Ford, Jaguar Land Rover, and Stellantis, are urging the UK government to renegotiate the Brexit deal due to concerns over the sourcing rules for electric vehicle (EV) parts. The automakers warn that the current regulations on where components must be sourced from could hinder the growth of the British automotive industry and disrupt the transition to electric vehicles. The proposed stricter “rules of origin” set to come into effect next year could potentially lead to tariffs on car exports, impacting the competitiveness of UK-made EVs.
Threat to EV Production: The current post-Brexit regulations require that 40% of an electric vehicle’s parts, based on value, be sourced either in the UK or the EU for it to be sold without a 10% trade tariff. However, this requirement is set to increase to 45% next year. Since most EV batteries are still imported from Asia, and batteries constitute a significant portion of a car’s manufacturing cost, vehicles produced in the UK and the EU may not meet the criteria under the new rules.
Industry Impact and Job Losses: Stellantis, the parent company of Vauxhall, Peugeot, and Citroën, warned that unless there is a reconsideration of the regulations, it might be forced to close some of its UK operations, leading to potential job losses in an industry that employs 800,000 people in Britain. Ford, which manufactures electric cars in Germany and parts in the UK, highlighted that the requirement would impose unnecessary costs on customers who aim to embrace green technologies. The carmakers emphasize the need for the UK and the EU to collaborate and find a solution to avoid detrimental effects on the industry’s transition to clean mobility.
Call for Renegotiation: This marks the first time that automakers have explicitly called for a renegotiation of the Brexit deal. Industry leaders are pressuring both the UK and the EU to come to the table and delay the increase in the threshold until 2027. This extension would provide European factories with sufficient time to establish their battery production capabilities, reducing dependence on Asian suppliers.
Government Reassurances and Challenges: Chancellor Jeremy Hunt attempted to reassure manufacturers by emphasizing the government’s commitment to developing EV battery supply within the UK. He acknowledged the importance of having battery production facilities close to car manufacturing plants. However, uncertainties remain regarding the feasibility and competitiveness of UK-based production in light of potential tariffs.
Concerns Over Viability and Employment: Stellantis has expressed concerns about the viability of its plants in Ellesmere Port and Luton, emphasizing that tariffs would make UK car production more expensive compared to Japan or South Korea. The Ellesmere Port plant, scheduled to commence EV production later this year, currently employs 1,000 workers, while 1,200 individuals are employed in Luton, manufacturing Vauxhall and Fiat vans. Additionally, thousands of jobs are indirectly supported by the supply chain to these plants.
The call by major carmakers to renegotiate the Brexit deal’s rules on EV parts sourcing reflects the industry’s concerns about potential tariffs that could hinder the growth of the British automotive sector and disrupt the transition to electric vehicles. The UK government faces the challenge of finding a balance between supporting the domestic manufacturing industry, ensuring competitive production costs, and complying with post-Brexit regulations. Resolving these issues and creating a favorable environment for EV production will be crucial for the long-term success of the British automotive industry and the achievement of sustainability goals.
