THE owner of a major UK car manufacturer has urged the Government to secure a better Brexit deal – warning that without one, they will not meet a commitment to make electric vehicles in the country.
Vauxhall’s parent company Stellantis urged the UK Government to overhaul the Trade and Co-operation Agreement (TCA) with the European Union.
The firm told a Commons inquiry into the supply of batteries for electric vehicles (EVs) that their UK investments were in the balance due to the terms of the trade deal.
Under the TCA, from next year 45% of an electric car’s value should originate in the UK or EU to qualify for trade without tariffs, with higher requirements for batteries.
Without meeting the requirements, cars manufactured in the UK would face a 10% tariff, making domestic production and exports uncompetitive with cars built within the EU or countries such as Japan and South Korea.
Professor David Bailey, from Birmingham Business School, said: “I think there is a kind of existential threat to the UK car industry.”
He told BBC Radio 4’s Today programme: “Car makers have been saying for some time, they can’t meet those rules as they tighten up, and they’re going to potentially be facing tariffs.”
Stellantis, the world’s fourth biggest car maker, committed to making electric vehicles at its Ellesmere Port and Luton plants two years ago.
But in a submission to the Commons Business and Trade Committee, the company said the Brexit deal was a “threat to our export business and the sustainability of our UK manufacturing operations”.
It called on the UK Government to reach an agreement with the EU to maintain existing rules until 2027, rather than introduce next year’s planned changes.
Stellantis said the rise in the cost of raw materials during the pandemic and energy crisis meant it was “unable to meet these rules of origin”.
The company said that 10% tariffs would mean manufacturers “will not continue to invest” and will relocate.
“To reinforce the sustainability of our manufacturing plants in the UK, the UK must consider its trading arrangements with Europe,” Stellantis told the inquiry, listing Honda’s closing of its site in Swindon and investment in the US as examples of its impact.
Stellantis said there will be “insufficient battery production” in the UK or Europe to meet government targets of phasing out petrol and diesel vehicles by 2025 and 2030.
“If we are unable to rely on sufficient UK or European batteries, we will be at a major competitive disadvantage. In particular against Asian imports,” it said.
“We need to reinforce the competitiveness of the UK by establishing battery production in the UK.”
Electric cars and batteries were among the final parts of the Brexit deal agreed upon between then prime minister Boris Johnson and President of the European Commission Ursula von der Leyen in 2020.
Darren Jones, Labour chairman of the Business and Trade Committee, said the Government “has failed to secure UK car battery production”.
“Exports to the EU will be more expensive and car production will leave the UK, according to evidence submitted to our inquiry,” he added.
A Government spokesperson said: “The Business and Trade Secretary has raised this with the EU and is determined to ensure the UK remains one of the best locations in the world for automotive manufacturing, especially as we transition to electric vehicles.
“We are supporting the industry through the Automotive Transformation Fund and Advanced Propulsion Centre to develop a high-value end-to-end electrified automotive supply chain in the UK and support cutting-edge automotive technologies.
“In the coming months, the Government will build on these interventions with decisive action to ensure future investment in zero-emission vehicle manufacturing.”
