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Saturday 23rd September

Stellantis says Brexit rules threaten UK jobs, could close factories

Carmaking giant urges UK government to renegotiate rules to avoid expensive tariffs

Published: 17 May 2023

Stellantis has urged the government to renegotiate the Brexit trade deal terms to avoid closing its UK factories and the loss of thousands of jobs.

The world’s fourth biggest carmaker, which owns Vauxhall, Peugeot, Citroen, Fiat and others, has warned it will face a 10 per cent tariff from next year because the electric cars it builds won’t have batteries produced in the UK.

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The lack of UK battery production means Stellantis will be forced to source batteries from Europe and China “which will make domestic production uncompetitive against Asian players”.

Why the 10 per cent hike? Under the new ‘Rules of Origin’ set to come into effect in 2024, 45 per cent of the value of an electric car has to come from the UK to qualify for trade without tariffs. Rising battery costs mean Stellantis won’t be able to meet this target.

“If we continue to source batteries from mainland Europe and China our UK Stellantis plants will be at a competitive disadvantage due to the higher logistics costs that we will face to transport the batteries from mainland Europe to the UK,” it said. “These costs will add to the total cost of ownership of a battery electric vehicle, alongside potential tariff costs from Rules of Origin, high running costs due to the cost-of-living crisis, costs that will be passed onto the consumer.

“If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, operations will close. Manufacturers will not continue to invest and relocate manufacturing operations outside of the UK, as seen with previously established UK manufacturers such as Ford and Mini.

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“Ford no longer manufactures light commercial vehicles in the UK, having stopped building cars in the UK in 2002 and vans (Transits) in July 2013 and BMW Group announced in October 2022 that the electric Mini would no longer be produced in the UK, relocating e-Mini manufacturing to Boading, China.

“Similarly, Honda [is] investing significantly in the US for EV production. The closing of UK manufacturing will see significant job losses, the loss of a skilled workforce and a negative impact to the UK economy.”

The Rules of Origin won't just affect Stellantis, of course, but all UK electric carmaking. Indeed in 2021, Nissan announced a £1bn investment into its Sunderland plant to transform it into an EV hub. There's a planned nine gigawatt factory with the capability to make 100,000 Nissan batteries each year... which will help power the next-generation Leaf.

The UK’s Society of Motor Manufacturers and Traders said the rules pose a 'significant' challenge to UK and European manufacturers. “At a time when every country is accelerating their transition to zero emission transport, and global competitors are offering billions to attract investment in their industries, a pragmatic solution must be found quickly. We urgently need an industrial strategy that creates attractive investment conditions and positions the UK as one of the best places in the world for advanced automotive manufacturing," it said.

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