Stellantis, the manufacturer behind Vauxhall, Fiat, Citroen, Peugeot and more, has issued a stark warning to the UK government.
The company has called for a renegotiation of the Brexit deal, as the Conservative party’s existing agreement is likely to force the closure of some of its UK operations, thereby putting over 2,000 jobs at risk.
Stellantis, the world’s fourth-largest carmaker, states that it can no longer comply with the requirement that 45% of parts by value be sourced in the UK or EU by 2024.
The surge in raw material costs, primarily used in EV batteries, during the pandemic and the ongoing energy crisis, has rapidly accelerated the issue. Currently, EV batteries are predominantly made in Asia. The European factories that are poised to meet the surging demand might not be operational in time, leading to a race against time for compliance.
Stellantis’ petition for a renegotiation of the Brexit deal marks the first explicit call by a carmaker for a revision to the terms. In a submission to the House of Commons, Stellantis said:
“To reinforce the sustainability of our manufacturing plants in the UK, the UK must consider its trading arrangements with Europe (…) If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable operations will close.”
Representatives from Stellantis are scheduled to meet with the UK’s business secretary, Kemi Badenoch, to discuss the matter.
The current Brexit trade deal, signed by Lord Frost in December 2020, is slated for renegotiation in 2025. However, Stellantis insists that the government needs to secure an agreement with the EU to maintain the existing rules until 2027.
Labour leader Sir Keir Starmer stressed:
“Look, we’re not going to re-enter the EU. 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 not 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.
So, yes, we need a better Brexit deal. We will make Brexit work. That doesn’t mean reversing the decision and going back into the EU but the deal we’ve got, it was said to be oven-ready; it wasn’t even half-baked.”
In response to Stellantis’ concerns, Chancellor Jeremy Hunt said:
“Everyone is trying to develop supply of EV batteries, and so we need to have that supply here in the UK. The closer it’s located to the factories that are making the rest of the car, the better.
And all I would say is, watch this space, because we are very focused on making sure the UK gets that EV manufacturing capacity.”
The movement towards UK and EU-based EV battery manufacturing is simply too slow. Requiring the parts to be sourced in the UK and EU is an admirable outcome, but “watch this space” clearly implies that, yet again, the infrastructure is not yet in place to enact these ambitions.
Pushing ahead with deals that evidently do not work for the manufacturers they concern is achieving nothing other than diminishing the UK’s EV output, while putting thousands of jobs at risk.
As Stellantis awaits the outcome of its plea for a renegotiated Brexit deal, the automotive industry faces an uncertain future. Finding a balance between meeting trade requirements and supporting sustainable manufacturing operations will be crucial for the sector’s continued growth and stability in the post-Brexit landscape.