8:37 am, May 19, 2023
The government is in talks with the EU as it seeks to agree a deal that would avoid an ‘existential crisis’ for the UK car industry.
New laws, set to be introduced in 2024, could see carmakers slapped with huge tariffs when selling UK-built EVs in mainland Europe.
The UK’s current Trade and Co-operation Agreement (TCA) with the EU means that from next year, 45 per cent of an EV’s value should originate in the UK or EU to qualify for tariff-free trade.
Without meeting the requirements, cars manufactured in the UK would face a 10 per cent tariff if sold in the EU – and vice versa – rendering them uncompetitive.
Earlier this week, Stellantis called for changes to the Brexit deal and said it would be unable to keep a commitment to make EVs in the UK without amendments.
Business secretary Kemi Badenoch and UK officials have raised the issue with counterparts in Brussels and there are hopes a compromise can be reached.
A Downing Street spokesman said: ‘We continue to want to work closely with the EU to find a solution to this problem.
‘We think it can be resolved within the TCA and we want to continue to take that work forward.’
However, Professor David Bailey, from Birmingham Business School, told the BBC that without UK manufacturing of EV batteries ‘I think there is a kind of existential threat to the UK car industry’.
His comment came after a panel of industry leaders warned MPs that the UK may have ‘missed the boat’ when it comes to production of EV batteries.
As the argument rumbles on, Rishi Sunak has been in Japan for the G7 summit.
Speaking to broadcasters, the PM confirmed talks were ongoing about how to address concerns relating to auto manufacturing ‘more generally’.
He said: ‘It’s something that car manufacturers across Europe, not just in the UK, have raised as a concern.
‘And 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.’
On concerns about UK battery-making capacity, Sunak added: ‘Nissan have invested a billion pounds in battery manufacturing capability in the north-east.
‘I’ll be talking to the Nissan CEO and other Japanese business leaders later about investment into the UK.’
