- Stellantis has warned it will not be able to maintain its commitment to making ‘electric cars’ in Britain without the required changes. * Ford described the rules as imposing an “unnecessary cost”. * Jaguar Land Rover, the UK’s biggest carmaker, said the timing of the new rules was “unrealistic”.
These rules are imposed by the trade and cooperation agreement between London and Brussels, signed in 2020. According to Stellantis, which owns many famous brands (Citroën, Peugeot, Fiat, DS, Jeep, Alfa Romeo, Maserati, Abarth), it struggles to comply with the “rules of origin” of the agreement, which requires that 40% of electric vehicle parts with national content come from the United Kingdom or the European Union in order to benefit from trade “in duty free”.
The crisis has exploded sharply this year in particular – even though the agreement was signed in 2020 – given that the planned 40% will increase to 45% from 2024, then to 55% in 2027, provided the battery comes from of the United Kingdom or the European Union. .
Ongoing tensionIn statements exclusive to the “Sky News Arabia Economy” site, Assistant Professor in the Department of Computer Science and Analytics at the Kogod School of Business in Washington, Frank Dubois, an expert specializing in the automotive industry, indicates that this crisis is expected to be an ongoing tension between regulators and automakers.
The aforementioned rules threaten manufacturers to stop investing and move manufacturing operations out of the UK. This closure, in turn, will create significant job losses and loss of skilled labour, in addition to the negative impact on the UK economy, according to UK reports.
The academic, whose research focuses on global supply chain management, notes that:
*Brexit has major implications for UK EV manufacturers; Due to the way the rules of the original system were established.
- Next year, all electric cars exported from the UK to the EU must contain at least 45% EU-UK content, to qualify for zero tariffs.
-
For BEVs, it will be a problem for them.
At the same time, he points out that at this stage, despite the widespread interest in investing in battery manufacturing in the EU, most BEV batteries and motors come from Asia, namely China, South Korea and Japan.
He explains that “in the absence of an agreement to change the rules of origin and facilitate the use of components from countries with free trade agreements between the United Kingdom and the European Union, a tariff 10% will be applied to electric cars”. exports from the United Kingdom to the European Union (which increases the cost of the car and reduces its competitiveness.
- Stellantis said in a statement that “if the cost of manufacturing electric cars in the UK becomes uncompetitive and unsustainable, operations will be halted”.
-
The company is of the opinion that “the stated requirements make UK production unviable”. And it says it will have no choice but to shut down operations, putting thousands of jobs at risk, according to a report by Britain’s Guardian newspaper.
High prices… and falling competitiveness
And the assistant professor in the Department of Information Technology and Analytics at the Kogod School of Business in Washington points out in his interview with Sky News Arabia Economy that this is a natural incentive for price-conscious consumers to buy. cars without a higher tariff, and therefore in contradiction with energy transition initiatives.
“Furthermore, requiring batteries to be sourced from higher cost producers in the EU and UK will increase costs and make these vehicles less price competitive with conventional petrol and diesel cars,” adds- he.
Ford, which has invested £380 million in increasing its electric powertrain capacity at its plant in Halewood, Merseyside (a metropolitan county in north-west England), issued a statement on Wednesday calling for this that the rule change will be delayed for three years while the UK and EU work to improve their generation capacity from batteries.
An existential threat to Britain’s car industry
The UK Guardian newspaper report quoted David Bailey, professor of business economics at Birmingham Business School, as saying:
- The problem is that this crisis poses an “existential threat to the UK car industry”.
-
BRICS rules ‘put the UK at a competitive disadvantage’.
Andy Palmer, the director of European battery manufacturer InoBat, is quoted as saying:
- 800,000 jobs in the UK linked to the car industry are ‘at risk’.
-
If we cannot comply with these local content rules and if we do not have adequate production capacity in the UK, these car manufacturers will “migrate to mainland Europe”.
According to the aforementioned report, the car industry was one of the most vocal critics of Britain’s exit from the European Union. Companies warned in 2020 that the exit would cost the sector £55 billion and would add £1,900 to the average cost of an imported car. of the European Union.
While several companies – including Stellantis – are rushing to build “superfactories” for car batteries in the European Union, and a major project is underway in the UK in Sunderland, most of them are not However, they won’t be ready for 2024, meaning carmakers across Europe will continue to rely on imports from major Asian battery makers.
Read the Latest World News Today on The Eastern Herald.
