Stellantis’ Vauxhall Ellesmere Port electric vehicle plant, which it says is threatened by rules of origin requirements © Photo by Vauxhall via Getty Images
Stellantis’ Vauxhall Ellesmere Port electric vehicle plant, which it says is threatened by rules of origin requirements © Photo by Vauxhall via Getty Images

UK ‘engaged in dialogue’ with EU over rules of origin requirements

18 May 2023

UK prime minister Rishi Sunak says he is “engaging in dialogue” with the EU after British car manufacturers warned rules of origin requirements would force them to shut production.

The PM has tried to reassure manufacturers that concerns over the rule of origin requirements due to come into force next year will not disadvantage British electric vehicle makers. 

He said: “It's something that car manufacturers across Europe, not just in the UK, have raised as a concern. As a result of that we are engaged in a dialogue with the EU about how we might address those concerns when it comes to auto manufacturing more generally."

As of next year, 45% of the value of an electric vehicle will be required to originate in the UK or EU to qualify for tariff-free trade. This percentage will then rise again in 2027.

Under the UK-EU post-Brexit trade agreement, British firms failing to meet these requirements could face a 10% export tariff.

Currently, the UK and Europe do not produce enough electric vehicle batteries to meet automotive production demand, so firms rely on importing batteries from Asia i.e. ones which do not meet rules of origin criteria. 

Carmakers have slammed the rules, and Stellantis, the fourth-largest car manufacturer in the world, said the move would make UK exports “uncompetitive in comparison to imports from Japanese and South Korean manufacturers, as well as domestic [European] production”.

Stellantis, which manufactures cars including Vauxhall, Peugeot Citroën and Fiat, told a House of Commons inquiry: “If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable operations will close.” 

It warned manufacturers will not continue to invest and will likely relocate outside of the UK instead, a decision previously taken by established UK manufacturers, such as Ford and Mini.

Stellantis has requested tariffs be delayed until 2027, to allow time for European battery manufacturers to ramp up production to a level that enables UK automakers to meet the threshold.

Society of Motor Manufacturers and Traders chief executive, Mike Hawes, added the rule of origin requirements “pose a significant challenge to manufacturers on both sides of the channel, with the prospect of tariffs and price increases which discourage consumers from buying the very vehicles needed to achieve climate change goals”.

Hawkes continued: “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. We urgently need an industrial strategy that creates attractive investment conditions and positions the UK as one of the best places in the world for advanced automotive manufacturing.”

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