UK Car Industry Demands Brexit Deal Renegotiation to Avert “Existential Threat”

The UK’s Chancellor of the Exchequer, Rishi Sunak, is under pressure to revisit the country’s Brexit deal as warnings emerge that the car industry in Britain faces an “existential threat” without necessary changes, putting numerous jobs at risk.

Vauxhall’s parent company, Stellantis, has informed Members of Parliament that it will be unable to honor its commitment to produce electric vehicles in the UK unless alterations are made to the Trade and Co-operation Agreement (TCA) with the European Union.

Calls for a Better Brexit Deal:

Labour leader Sir Keir Starmer has voiced the need for a “better Brexit deal” to ensure the continuity of operations for companies like Vauxhall within the UK.

Business and Trade Secretary Kemi Badenoch has already raised the matter with Brussels on behalf of the government.

Concerns Raised by Car Makers:

Stellantis, the parent company of Vauxhall, Citroen, Peugeot, and Fiat, employing over 5,000 people in the UK, revealed during a parliamentary inquiry into the supply of batteries for electric vehicles that their investments in the country are hanging in the balance due to the terms of the trade deal.

According to the Trade and Co-operation Agreement, starting next year, 45% of an electric car’s value should originate from the UK or EU to qualify for tariff-free trade, with more stringent requirements for batteries.

Existential Threat to the Car Industry:

Professor David Bailey from Birmingham Business School warned of an “existential threat” to the UK car industry, as car manufacturers have been expressing their inability to meet the tightening rules, potentially leading to tariffs on their products.

Failure to meet the requirements would result in a 10% tariff on cars manufactured in the UK, rendering domestic production and exports less competitive compared to vehicles built within the EU or other countries.

Demand for Battery Production and Revised Rules:

Stellantis called on the UK government to negotiate with the EU to maintain the existing rules until 2027, rather than implementing the planned changes next year.

The company stated that the pandemic-induced increase in raw material costs, combined with the energy crisis, has made it impossible for them to comply with the rules of origin.

They warned that the introduction of tariffs would deter further investment and could lead to relocation.

Implications for Battery Production and EV Targets:

Stellantis further expressed concerns about insufficient battery production in the UK and Europe to meet government targets for phasing out petrol and diesel vehicles by 2025 and 2030.

The company emphasized the need to establish battery production within the UK to maintain competitiveness, particularly against imports from Asia.

Criticism of Government’s Failure:

Darren Jones, Labour chairman of the Business and Trade Committee, criticized the government for its inability to secure UK car battery production, suggesting that exports to the EU will become more expensive and car production will shift away from the UK.

Government’s Response and Future Plans:

The government stated its determination to support the automotive manufacturing industry during the transition to electric vehicles, emphasizing ongoing support through initiatives like the Automotive Transformation Fund and Advanced Propulsion Centre.

The government plans to take decisive action in the coming months to ensure future investment in zero-emission vehicle manufacturing and to establish a high-value electrified automotive supply chain in the UK.

Conclusion:

As the UK car industry faces an “existential threat,” demands for the renegotiation of the Brexit deal are growing.

Stellantis, the parent company of Vauxhall, has warned that without changes to the Trade and Co-operation Agreement, they may be unable to fulfill their commitments to produce electric vehicles in the UK.

Concerns over meeting stringent rules of origin and potential tariffs on UK-made cars have raised

fears of job losses and the relocation of car manufacturing operations.

The government faces calls to secure a better Brexit deal to safeguard the future of the car industry and maintain competitiveness in the evolving market of electric vehicles.