The owner of Vauxhall, Peugeot, Citroen and Fiat brands, Stellantis, has warned that British car factories could face closure and job losses if the UK government does not renegotiate its Brexit trade deal immediately. According to the automaker, under the current deal, it would face tariffs when exporting electric vans to Europe from next year when tougher post-Brexit rules come into force. The carmaker has urged the UK government to extend the current rules on the sourcing of parts until at least 2027 instead of the planned 2024 change.
Stellantis has also stated that if the cost of electric vehicle (EV) manufacturing in the UK becomes uncompetitive and unsustainable, operations will close, and manufacturers will relocate manufacturing operations outside of the UK, as seen with previously established UK manufacturers such as Ford and Mini. Under the trade deal agreed when the UK left the bloc, 45% of the value of an electric vehicle must come from Britain or the EU from 2024 to avoid tariffs.
The British car trade group, the Society of Motor Manufacturers and Traders, has also warned that the current manufacturing capability in the EU and the UK would not allow the sector to meet the requirements for batteries and battery parts. These warnings come at a time when carmakers globally are selecting sites to build new battery gigafactories, and there are fears that the British car sector does not have the capacity or the supply chain to switch to electric vehicles.
To save its car industry, the UK needs to not only extend the timeframe with the EU but also urgently attract battery manufacturers and other auto suppliers to set up here, according to Andy Palmer, former chief operating officer at Nissan. Palmer, who is also the chairman of European battery manufacturer InoBat, warns that the cost of failure is very clear and could result in 800,000 job losses in the UK, which is basically those jobs associated with the car industry.
Britain has drawn electric vehicle investment from Nissan and Ford, while other big players are still weighing up where to invest. Stellantis had announced a £100m ($126m) electric vehicle investment in its Ellesmere Port site in 2021. However, it said in the submission that when it made that announcement, it believed it would be able to create enough parts in Britain or Europe to meet the rules.