Rishi Sunak in talks with EU regarding UK electric cars' threat

The UK is engaging in discussions with the EU concerning a Brexit trade deal deadline that carmakers have cautioned could endanger the UK industry. Prime Minister Rishi Sunak highlighted ongoing dialogue between the UK and the EU regarding an impending rule change that could impact the prospects of UK electric cars.

Both British and EU carmakers have been requesting a postponement of the rule change. Stellantis, the parent company of Vauxhall, Peugeot, Citroen, and Fiat, has expressed concerns about the potential risk to its UK manufacturing plants.

Although the company had previously announced its intention to produce electric vans in the UK, it now states that these plans are at risk. They have cautioned that exports to the EU could be subject to tariffs of 10% due to regulations regarding the sourcing of parts.

Presently, to qualify for tariff-free trade, an electric vehicle must have 40% of its value originating from the UK or EU under existing regulations. However, starting from the beginning of next year, this percentage will increase to 45%. As for battery packs, the threshold for tariff-free trade will be set at 60%.

Starting from 2027, the requirements become more stringent, with the value of an electric vehicle needing to reach 55% and battery packs requiring 70% to meet the rules of origin.

Stellantis has expressed its inability to comply with these regulations due to the significant increase in costs for raw materials and energy.

The European Automobile Manufacturers’ Association, representing Europe’s car trade, has requested the EU to extend the deadline, citing unpreparedness in the supply chain.

Speaking at the G7 summit in Japan, Prime Minister Rishi Sunak acknowledged the concerns raised by car manufacturers throughout Europe, emphasizing that the approaching deadline is a significant concern.

He further added, “Consequently, we are actively involved in discussions with the EU to explore potential solutions in addressing these concerns related to the broader automotive manufacturing sector.”

Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders (SMMT), expressed his hope for a reasonable outcome, stating, “I’m optimistic that common sense will prevail to some extent.”

He emphasized that a complete renegotiation of the Brexit deal was unnecessary, and instead, an agreement to postpone the implementation of certain impending rule changes would suffice. He conveyed this sentiment during an interview on BBC’s Today program.

Industry experts have raised concerns about the UK’s ability to develop its own battery manufacturing industry within the given timeframe. They argue that the heavy investments being made in the US, China, and the EU could potentially hinder the UK’s competitiveness in the long term.

The additional costs associated with the current situation are seen as undermining existing investments and deterring potential future investments in the industry.

Mr. Hawes expressed that the UK still has an opportunity, but time is of the essence as the window of opportunity is gradually closing. He likened the current situation to a boat with its engines already running, indicating the urgency.

He highlighted the substantial investments made in gigafactories and product allocation in recent years, emphasizing that although the window of opportunity is not completely closed, it is rapidly diminishing.

Source : bbc.com

By Ryan

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