Automaker Stellantis warned Wednesday that at least one of its British manufacturing plants was under threat from European Union rules covering the percentage of parts in EV batteries that must be sourced domestically or from the EU. File Photo by James Atoa/UPI | License Photo
May 17 (UPI) -- Netherlands-based automaker Stellantis warned Wednesday that it could be forced to shutter some of its electric car plants in Britain unless the government renegotiates Brexit rules that require 45% of parts to be British or European Union-made.
The company which makes Vauxhall, Fiat, Citroen and Peugeot vehicles said cost rises of materials used in electric car batteries resulting from the COVID-19 pandemic and spiraling energy prices meant it was now unable to stay within the rules.
When exported to the EU, Electric vehicles manufactured at its Ellesmere Port plant which employs 1,000 workers, will attract 10% tariffs that would put them at a competitive disadvantage, putting the operation in danger of closure, the company said.
Stellantis executives were due to meet with ministers Wednesday to press for the government to try to get an improved deal with Brussels.
"To reinforce the sustainability of our manufacturing plants in the U.K., the U.K. must consider its trading arrangements with Europe," Stellantis said in testimony earlier this year to a House of Commons inquiry into electric car production.
Otherwise, it would incur additional costs in Britain for importing batteries, warning that if the "cost of EV manufacturing in the U.K. becomes uncompetitive and unsustainable operations will close," pointing to BMW's shifting production to China of electric versions of Mini and Honda's move to the United States after the closure of its Swindon plant in 2021.
Once a grace period expires next year, so-called Rules of Origin quotas rise 45% and then 65%, with non-compliant exports attracting 10% tariffs that will make them more costly than EVs that contain the required level of domestic or EU-made parts.
Stellantis also cited Britain's lack of materials and manufacturing capacity for battery production meant while its Europe operation imported a large proportion of the batteries, the company has made significant investments in battery plants in France, Germany and Italy.
Stellantis said the higher logistics costs of importing European and Chinese-made batteries posed a further risk to the sustainability of its British manufacturing operations.
Andy Palmer, Former Nissan COO and chair of EV battery maker Inobat, told the BBC that Britain had been "sleeping at the wheel when it comes to bringing battery plants to the United Kingdom."
The rules of origin for batteries posed a significant challenge to manufacturers on both sides of the Channel, with tariffs and price increases likely to put consumers off buying vehicles needed to reach climate change goals, the Society of Motor Manufacturers and Traders said in a news release.
"At a time when every country is accelerating their transition to zero-emission transport, and global competitors are offering billions to attract investment in their industries, a pragmatic solution must be found quickly," chief executive Mike Hawes said. "We urgently need an industrial strategy that creates attractive investment conditions and positions the U.K. as one of the best places in the world for advanced automotive manufacturing."