The manufacturer of cars including Vauxhall, Peugeot, Citroen and Fiat has called on the government to make changes to the Brexit deal or risk losing large parts of the UK car industry.
Stellantis, the world’s fourth biggest car maker, had previously committed to making electric vehicles in the UK, but says it will no longer be able to meet Brexit trade rules on where parts are sourced.
Under the Brexit agreement, rules state that from next year 45% of the value of the electric car should originate in the UK or EU to qualify for trade without tariffs.
However, Stellantis says following a surge in the cost of raw materials it is “now unable to meet these rules of origin” and is asking the government to come to an agreement with the EU to keep the rules as they are until 2027.
The BBC reports that the manufacturer warns of the “threat to our export business and the sustainability of our UK manufacturing operations”.
READ MORE: Farage says he may be ‘forced’ to make political comeback to sort out Tory mess
In a submission to a Commons inquiry into electric car production, the firm said its UK investments were based on meeting the strict terms of the post-Brexit free trade deal.
If the government cannot reach agreement to keep the current rules until 2027, from next year “trade between the UK and EU would be subject to 10% tariffs”, it said.
This would make domestic production and exports uncompetitive in comparison to Japan and South Korea just two years after it said the future of its Ellesmere Port and Luton plants were secure.
“To reinforce the sustainability of our manufacturing plants in the UK, the UK must consider its trading arrangements with Europe,” Stellantis said.
A government spokesperson told the BBC that Business and Trade Secretary Kemi Badenoch had raised the matter with the EU.
They said that Ms Badenoch “is determined to ensure the UK remains one of the best locations in the world for automotive manufacturing, especially as we transition to electric vehicles.”
The government has set up a fund to develop the supply chain for electric vehicles and is planning “decisive action to ensure future investment in zero emission vehicle manufacturing”, the spokesperson added.
Stellantis warns that uncompetitive electric vehicle costs will mean “manufacturers will not continue to invest” and will “relocate manufacturing operations outside of the UK”.
It said the core problem remains a lack of UK battery plants at a time when the US, China and the EU are putting large subsidies into this market.
Earlier this week, French President Emmanuel Macron hosted Tesla’s Elon Musk, who hinted he might invest in a gigafactory in France.
The owners of the UK’s biggest manufacturer, Jaguar Land Rover, is currently being wooed by the Spanish government to host a gigafactory that been assumed would be built in the UK.
The first stage of the Brexit trade agreement comes in next year, but the BBC says that some in the UK car industry hope the EU may want to renegotiate the agreement if its own manufacturers are struggling to meet requirements.
The rules are then due to tighten again in 2027, and at this time it will be impossible for UK manufacturers to export cars tariff free without UK battery production.
