The UK is engaging with the EU over a Brexit trade deal deadline that carmakers have expressed concerns about, posing a potential threat to the UK industry. Prime Minister Rishi Sunak confirmed ongoing dialogue with the EU regarding a rule change that could impact the UK’s electric car aspirations.
British and EU carmakers have been urging for a postponement of the rule change. Stellantis, the owner of Vauxhall, Peugeot, Citroen, and Fiat, has warned that its UK factories are under threat.
Despite previous commitments to manufacture electric vans in the UK, the company now expresses concerns about the viability of those plans. It warns that potential tariffs of 10% on exports to the EU could be imposed due to regulations on parts sourcing.
Currently, electric vehicles must have 40% of their value originating from the UK or EU to qualify for tariff-free trade. However, starting from next year, this percentage will increase to 45%, and for battery packs, the threshold will be set at 60%.
Starting from 2027, the requirements for the value of an electric vehicle and battery packs will be further increased to 55% and 70%, respectively.
Stellantis cited the recent escalation in costs of raw materials and energy, expressing their inability to comply with these rules of origin.
The European Automobile Manufacturers’ Association, representing Europe’s car trade, has urged the EU to extend the deadline, citing concerns about the readiness of the supply chain.
Mr. Sunak, while attending a G7 summit in Japan, addressed concerns raised by car manufacturers across Europe, not just in the UK, regarding the approaching deadline.
Mr. Sunak added that the UK is currently in discussions with the EU to find potential solutions to address these concerns regarding the automotive manufacturing sector as a whole.
Mike Hawes, the CEO of the Society of Motor Manufacturers and Traders (SMMT), a UK trade organization, expressed his optimism for the triumph of “a reasonable approach.”
During an interview on BBC’s Today program, he stated, “There is no requirement for a complete renegotiation of the Brexit agreement. We simply need an understanding that certain regulations scheduled to change next year will not be implemented.”
Expanding on the matter, he elaborated, “Ensuring the long-term competitiveness of manufacturing plants becomes increasingly challenging when faced with these additional expenses. It puts at risk both the investments that have already been made and potential future investments.”
Industry professionals have raised apprehensions regarding the dwindling timeframe for the UK to establish its own battery manufacturing sector, as significant investments are being directed towards the United States, China, and the European Union.
Mr. Hawes emphasized that although the UK has not missed its opportunity, “the boat is now primed with its engines ignited, prepared to set sail.”
Highlighting the recent trend, he noted, “Over the past years, we have observed significant investments flowing into gigafactories and product allocation. Although the opportunity window is still ajar, it is unquestionably contracting.”
Regarding the concerns raised, Mr. Sunak emphasized, “Nissan’s remarkable billion-pound investment in battery manufacturing capabilities in the North East serves as a prime example.”
“Later today, I will engage in discussions with the CEO of Nissan and other Japanese business leaders concerning investment opportunities in the UK.”
On Thursday, Business and Trade Secretary Kemi Badenoch clarified that the concerns expressed by the automotive industry were unrelated to Brexit.
“The concern raised by the automotive industry pertains to rules of origin. This is an issue that even the EU is apprehensive about due to the increased costs of components,” she stated during the business and trade questions session in the House of Commons.
In anticipation of Mr. Sunak’s meeting with Japanese business leaders, the government made an announcement that Japanese companies had made commitments to invest nearly £18 billion in the UK.
The government emphasized that this investment would result in job creation and financing for offshore wind, as well as other clean-energy initiatives and affordable housing. Mr. Sunak hailed it as a “tremendous display of trust” in the UK economy.
Nevertheless, the Labour party countered by stating that foreign investment in the UK had drastically declined during the Conservative government’s tenure.
Source : bbc.com