CDA
June 1, 2023
Brands that manufacture in the UK are fearful of the new post-Brexit rules: they can mean big losses and redundancies.
Brexit has had and is having a series of economic consequences for governments, citizens and industry. And in this sense, the automotive sector is also being affectedespecially those manufacturers that produce vehicles in Great Britain.
Thus, Ford, Vauxhall (belonging to Stellantis) and Jaguar-Land Rover have asked the British government to renegotiate the Brexit agreement, alleging that the rules on the origin of the pieces threaten the future of the British car industry.
They ask to delay the application of the norm
In fact, these companies have warned the British Executive that the transition to electric vehicles could be hit hard unless the UK and EU delay tougher ‘rules of origin’, due to take effect next year and which could add tariffs on car exports.
Current post-Brexit rules require that 40 per cent of the value of the parts of an electric vehicle comes from the UK or the EU so that it can be sold across the English Channel without a 10 percent trade duty.
This ratio will increase to 45 percent next year And as most EV batteries are still imported from Asia and batteries account for a large part of the cost of manufacturing a car, vehicles made in the UK and the EU are likely to fall short of the rules.
Stellantis has been the first to issue a veiled threat: if this rule is not reconsidered, it could be forced to close some of its operations in the United Kingdom, jeopardizing jobs in an industry that employs 800,000 people in Britain.
France will only encourage the purchase of electric vehicles made in Europe: will more countries copy it?
Ford, which makes electric cars in Germany and parts in the UK, has pointed out that this measure would add “useless costs for customers who want to go green”. The tariffs will affect both UK and EU manufacturers, so “it is vital that the UK and the EU come to the table to agree a solution.”
Jaguar Land Rover, the UK’s largest car company, has called the current timetable “unrealistic and counterproductive”, calling on the UK and the EU to “quickly agree on a best-application solution to avoid destabilizing the industry’s transition to clean mobility.”
Manufacturers demand that the threshold increase be delayed until at least 2027 to give time for European factories to start producing enough batteries to reduce dependence on Asia.
