Stellantis warns that factory closures will occur if Brexit is not renegotiated

Stellantis, a carmaker, has warned that it could be forced to shut its Ellesmere port factory if ministers fail to renegotiate an important part of the UK’s Brexit deal with EU.

The company stated that electric vans manufactured at the Cheshire site of Vauxhall’s owner will be subject to tariffs of 10% when exported to continental Europe starting next year, because they won’t contain enough locally-sourced parts.

To avoid penalties, the rules require that by 2024, 45 percent of the value of an electrical vehicle must be sourced from the UK or EU.

The company stated in a Monday submission to the UK Parliament’s Business Committee: “If costs of EV production in the UK become uncompetitive or unsustainable, then operations will be closed.”

The statement continued: “Our request to the government is that they reach agreement with the EU in order to maintain the current Rules of Origin up until 2027.”

The warnings are echoed by a wider concern that UK-made electric cars, like the Nissan Leaf will be disadvantaged to European rivals if the new rules become effective and exports of cars become more costly.

In its submission, the UK’s Society of Motor Manufacturers and Traders warned: “The current manufacturing capabilities in the EU and UK do not allow our industry to meet upcoming requirements for battery and battery part origin.”

Stellantis is the first carmaker to publicly call on the UK government for a renegotiation of Brexit terms.

When , Stellantis, made their 2021 investment decision for the manufacture of electric vans in Ellesmere Port – a move which brought about a PS100mn and secured the site – the carmaker assumed that it would meet future local content standards.

The company stated that “due to the rapid change in operating environment caused by the conflict in Ukraine, raw material inflation costs and supply issues”, “we are no longer able to meet these Rules of Origin”.

The warnings are coming as the UK competes with European competitors and the US for EV makers and battery partners as the industry is preparing to switch to cleaner vehicles.

Stellantis cited Ford, who closed an engine factory in Bridgend, as well as Mini, who will shift production of electric cars to China, both examples of UK jobs being lost overseas.

Nissan and Ford have invested in the UK to make EVs and their parts, but it has been difficult for them to attract other players like Rivian and Tesla. Britishvolt went into administration on January 1, which set off the Business Committee’s investigation.

This year, we can expect a number of big decisions.

Tata Motors, owner of Jaguar Land Rover is nearing a decision on where to build its battery factory, alongside Envision AESC, a Chinese company.

The Financial Times reported that Toyota and Nissan are also facing investment decisions in their respective plants.

Stellantis plans to buy batteries through ACC, a joint-venture between Total and the carmaker, once their European plants are operational. However, they have been forced to purchase them from other suppliers until these sites are ready.

The automaker had already planned to manufacture vehicles in Ellesmere Port for both the local right-hand drive market and exports to the EU.

The UK government stated: “The Business and Trade Secretary has raised this issue with the EU, and is determined to make sure the UK remains a top location for automotive manufacturing in the world, especially as we move to electric vehicles.”