Ford, Vauxhall owner and JLR call for UK to
renegotiate Brexit deal
Carmakers call on Britain to change rules on batteries
that they say threaten electric vehicle production
Jasper
Jolly and Mark Sweney
Wed 17 May
2023 18.15 BST
Three big
global carmakers have called on the UK government to renegotiate the Brexit
deal, saying rules on where parts are sourced from threaten the future of the
British automotive industry.
Ford and
Jaguar Land Rover have joined Stellantis, which owns the Vauxhall, Peugeot and
Citroën brands, to warn the transition to electric vehicles will be knocked off
course unless the UK and EU delay stricter “rules of origin”, due to kick in
next year, that could add tariffs on car exports.
Current
post-Brexit rules require 40% of an electric vehicle’s parts by value to be
sourced in the UK or EU if it is to be sold on the other side of the Channel
without a 10% trade tariff.
This
proportion is due to rise to 45% next year, and because most electric vehicle
batteries are still imported from Asia, and batteries make up a large part of
the cost of building a car, vehicles made in the UK and the EU are likely to
fall foul of the rules.
Stellantis
said on Wednesday that without a rethink, it could be forced to shut some of
its UK operations, putting jobs at risk in an industry that employs 800,000
people in Britain.
Ford, which
makes electric cars in Germany and parts in the UK, said on Thursday the
requirement would add “pointless cost to customers wanting to go green”. A
spokesperson said: “Tariffs will hit both UK- and EU-based manufacturers, so it
is vital that the UK and EU come to the table to agree a solution.”
Jaguar Land
Rover, the UK’s largest automotive employer, joined the chorus, describing the
current timing as “unrealistic and counterproductive”, and calling on the UK
and EU to “quickly agree a better implementation solution to avoid
destabilising the industry’s transition to clean mobility”.
It was the
first time carmakers had explicitly urged a renegotiation of the Brexit deal.
Manufacturers
are putting pressure on both the EU and the UK to come to the table, demanding
the threshold increase be at least delayed until 2027 to allow time for
European factories to start producing enough batteries to reduce reliance on
Asia.
In a bid to
reassure manufacturers, the chancellor, Jeremy Hunt, told business leaders at
the British Chambers of Commerce annual conference on Wednesday: “Everyone is
trying to develop supply of EV batteries, and so we need to have that supply
here in the UK. The closer it’s located to the factories that are making the
rest of the car, the better.
“And all I
would say is, watch this space, because we are very focused on making sure the
UK gets that EV manufacturing capacity.”
Stellantis
has raised doubts about the viability of its plants at Ellesmere Port and
Luton, saying tariffs will make it more expensive to produce cars in the UK
than in Japan or South Korea. Its plant at Ellesmere Port, which is due to
start electric vehicle production later this year, employs 1,000 workers, while
1,200 are employed in Luton making Vauxhall and Fiat vans. Thousands more
people are employed in the UK in businesses that supply parts to the plants.
“To
reinforce the sustainability of our manufacturing plants in the UK, the UK must
consider its trading arrangements with Europe,” Stellantis said, in a
submission to a House of Commons inquiry into electric car production first
reported by the BBC. It cited extra costs for the UK if it were forced to
import batteries, adding: “If the cost of EV manufacturing in the UK becomes
uncompetitive and unsustainable operations will close.”
Bosses from
the manufacturer met the business secretary, Kemi Badenoch, on Wednesday to
discuss the problem. The company also wants arrangements for manufacturing
parts in Serbia and Morocco to be reviewed.
The trade
deal is due to be renegotiated in 2025 as part of the original pact between the
UK and the EU signed by Lord Frost in December 2020.
The effect
of the rules of origin changes varies between carmakers. One car industry
expert said Stellantis’s problems may stem from its decision to source
batteries initially from China’s CATL, the world’s largest battery maker.
Stellantis’s submission noted that it planned to “source batteries from
mainland Europe and China”.
A
government spokesperson said Badenoch “has raised this with the EU”.
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