UK "in dialogue" with EU over electric car export tariffs

Prime minister Rishi Sunak has said the UK government is in conversation with the European Union regarding new “rules of origin” tariffs, which have been criticised by Stellantis, Ford and JLR. Stellantis was the first of the three car makers to urge the government to renegotiate part of its Brexit deal with the EU to delay the new rules, which add tariffs to car exports. The fourth biggest car maker worldwide, which owns Vauxhall, Peugeot, Citroën and Fiat, among other key brands, said earlier this week that it couldn't follow parts-sourcing rules introduced through Brexit. Updated legislation, which is due to come into force in 2024, means that 45% of the value of an EV produced should come from the EU or the UK to qualify for trade without tariffs. The percentage will increase to 65% in 2027. Stellantis said the new rules could lead to vehicle factory closures, which would result in the loss of thousands of jobs at Ellesmere Port and Luton. Speaking to reporters in Japan on Thursday, Sunak said the rule-change deadline was "something that car manufacturers across Europe, not just in the UK, have raised as a concern". "And as a result of that, we're engaged in a dialogue with the EU about how we might address those concerns when it comes to auto manufacturing more generally," he added. In an enquiry submitted to the Department for Business, Energy and Industrial Strategy, Stellantis asked for the introduction of the 45% rule to be delayed to 2027. It also described the rules as “a threat to our export business and the sustainability of our UK manufacturing operations”. The company said: "If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, operations will close." Ford supported Stellantis’s view, saying the new rules of origin would add “pointless cost to customers wanting to go green”. The firm added: “Tariffs will hit both UK- and EU-based manufacturers, so it's vital that the UK and EU come to the table to agree on a solution.” JLR meanwhile said the decision was “unrealistic and counterproductive”, urging the EU and the UK to “quickly agree to a better implementation solution to avoid destabilising the industry’s transition to clean mobility". Stellantis is due to start production of its electric van line-up – the Vauxhall Combo Electric, Peugeot e-Partner and Citroën e-Berlingo – at Ellesmere Port this spring. The Cheshire factory has been used by Vauxhall for more than 60 years and has made more than 5.2 million vehicles. It first produced the Vauxhall Viva in 1964 and was the home of the popular Vauxhall Astra hatchback until last year. Stellantis said that it would invest elsewhere if changes weren't made and cited the example of Honda, which closed its Swindon plant in 2021 after 36 years. British production of the Honda Civic was lost as a result of the closure, along with around 3400 skilled jobs. Stellantis said: “Manufacturers will not continue to invest and [instead will] relocate manufacturing operations outside of the UK, as seen with previously established UK manufacturers such as Ford and Mini." The firm also cited logistical costs as a reason to negotiate, as well as the sustainability of its production facilities. "If we source batteries from mainland Europe and China, as currently planned, our UK Stellantis plants will also be at a competitive disadvantage, due to the higher logistics costs that we will face to transport the batteries from mainland Europe to the UK,” it said. The lack of a battery infrastructure in the UK was also a point raised by Stellantis, a view shared by the UK automotive industry's Society of Motor Manufacturers and Traders. Stellantis said: "If we're unable to rely on sufficient UK or European batteries, we will be at a major competitive disadvantage, in particular against Asian imports. We need to reinforce the competitiveness of the UK by establishing battery production in the UK." Speaking to the BBC, Labour party leader Sir Keir Starmer echoed the firm’s concerns about supporting the UK’s domestic automotive industry with an improved Brexit deal. Starmer said: “We’re not going to re-enter the EU. [But] we do need to improve that deal. Of course, we want a closer trading relationship. We absolutely do. “We want to ensure that Vauxhall and many others don't just survive in this country but thrive, because there are jobs bound up, there are families watching this morning either employed by Vauxhall or a similar place who are deeply worried about what this means.” Stellantis bosses are due to meet UK business secretary Kemi Badenoch today for discussions, and a government spokesperson has said the issue has been raised with the EU.