Stellantis tells the UK: Change the Brexit deal or watch car factories shut down

(Reuters) – British car factories will shut down with thousands of job losses unless the Brexit deal is quickly renegotiated, Stellantis (STLAM.MI) told the British Parliament, the latest in a series of warnings from the industry since the country left the union. European.

The carmaker, the world’s No. 3 by sales and owner of 14 brands including Vauxhall, Peugeot, Citroen and Fiat, said it will face tariffs under the current agreement when it exports electric vans to Europe from next year, when it enters into tougher post-Brexit rules. European implementation.

“If the cost of manufacturing electric cars in the UK becomes uncompetitive and unsustainable, operations will shut down,” Stellantis said in a memorandum submitted to a House of Commons committee examining the prospects for Britain’s electric car industry.

Stellantis urged the government to reach an agreement with the European Union on extending the current rules on part sourcing until 2027 rather than the planned 2024 change.

In response, a government spokesperson said the business minister had raised the issue with the EU.

“Watch that space, because we’re very focused on making sure the UK gets EV access and manufacturing capacity,” British Finance Minister Jeremy Hunt said Wednesday at a British Chamber of Commerce event.

Closely linked to the shift to electric cars is the potentially existential problem facing Britain’s car industry.

Under the trade deal agreed when Britain left the bloc, 45% of the value of an electric vehicle sold in the EU must come from Britain or the EU from 2024 to avoid tariffs.

The problem is that a battery pack can account for up to half the cost of a new EV. Batteries are also heavy and expensive to carry over long distances.

Experts have warned since Britain left the European Union at the end of 2020 that the country will need a number of giant electric battery factories or it could lose a large part of its car industry.

Only Japan’s Nissan (7201.T) has a small electric vehicle battery plant in Sunderland, with a second plant on the way.

The cost of failure

Britishvolt, a start-up that received British government support for an ambitious £3.8 billion ($4.80 billion) battery factory at a site in northern England, applied for management in January after struggling to raise funds.

The company was then bought by Australian company Recharge Industries, which has yet to reveal plans for the site.

In order to save the car industry, Britain must extend the time frame with the EU and urgently attract battery makers and other car suppliers to set up here, former Nissan chief operating officer Andy Palmer told BBC Radio.

“The cost of failure is very clear. It’s 800,000 jobs in the UK, mainly those jobs associated with the car industry,” said Palmer, who is also chairman of European battery maker InoBat.

“If you don’t have battery capacity in the UK, these car manufacturers will move to mainland Europe.”

The British Association of Car Manufacturers and Trade Group said in a note to Parliament that existing manufacturing capacity in the European Union and Britain would not allow the sector to meet requirements for batteries and battery parts.

The warnings come as automakers globally select sites to build giant battery factories.

Last week, the chief financial officer of Tata Motors (TAMO.NS), owner of Jaguar Land Rover, said it had not decided on a location for a new battery plant, but that advanced talks were underway.

Reuters reported in February that Tata was considering building an electric battery factory in Spain or Britain.

Stellantis has announced a £100m ($126m) investment in electric vehicles at its Ellesmere port site in 2021. It said in the application that it believed at the time it could build enough parts in Britain or Europe to meet the post-Brexit rules. Britain from the European Union, but now unable to do so.

($1 = 0.7923 pounds)

Reporting by Gokul Pisharody in Bengaluru; Editing by Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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