LONDON — The U.K. government is pushing to cut a deal with Brussels to avoid a post-Brexit cliff-edge which could severely damage the British auto industry, No. 10 Downing Street confirmed Wednesday.
A spokesperson for Rishi Sunak told journalists that “we hope” to cut a deal with the EU to stop an increase in tariffs on British electric vehicles (EVs) being exported to the EU from next year, after Vauxhall’s owner threatened to shut a key factory and as other automotive giants rebuked the existing timeline.
In a statement shared with POLITICO Wednesday Ford warned that unless the current trading requirements are extended, the tariff rise would undermine the switch to electric vehicles, add “pointless cost to customers wanting to go green” and hit manufacturers that had invested in the EV transition hardest.
“Today the industry does not have sufficient supply of locally-sourced batteries and components to meet demand,” the company said. “Ford is calling for current trade requirements to be extended to 2027, to allow time for the battery supply chain to develop in Europe and meet EV demand.”
Vauxhall, Fiat, Peugeot and Citroen owner Stellantis told a committee of cross-party British MPs on Tuesday that it may be forced to shut its Ellesmere Port factory, in England, if the U.K. and EU do not alter the post-Brexit U.K.-EU trade deal as it pertains to rules of origin on electric vehicles. The company was due to speak with the Business and Trade Secretary Kemi Badenoch Wednesday morning, the BBC reported.
The deal, which does not apply to combustion engine vehicles, mandates that 45 percent of the value of a new electric vehicle must come from parts originating in the U.K. from next year or face a 10 percent tariff when being sent to the EU.
This rate will increase to 65 percent in 2027 and the terms are being applied in both directions, meaning that EU vehicles sent to the U.K. are also facing increased tariffs without a deal to avoid the deadline.
Jobs exodus
Major carmakers, increasingly focused on electric vehicle production, warn that these new trade barriers will undermine the British auto sector and lead to jobs moving overseas.
Sunak’s spokesperson indicated Kemi Badenoch was having high-level talks on this with the European Commission and that work was also happening at an official level.
However, there was confusion over who was leading the talks for the U.K., with the Department for Business and Trade and No. 10 giving contrasting statements.
Sunak’s spokesperson said Badenoch was leading on the high-level talks, while Badenoch’s department said it was in fact the Foreign, Commonwealth and Development Office (FCDO).
The junior business minister, Nus Ghani, told the House of Commons that she and Badenoch have had “productive conversations with our counterparts in the European union,” but that the negotiations were the responsibility of the FCDO.
“We are aware of the concerns of U.K. and EU carmakers about the challenges and will of course make a strong representation,” she said.
In a statement to Westminster’s business and trade committee, Stellantis said: “If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, operations will close.
“Our request to government is to gain agreement with the EU to maintain the current Rules of Origin until 2027.”
The European automotive trade body, ACEA, also called for the phase-in period to be extended by three years.
Emilio Casalicchio and Joshua Posaner contributed reporting.