One of the world’s biggest carmakers has called on the government to renegotiate part of the Brexit deal or risk losing parts of its car industry.
Stellantis, which owns Vauxhall, Peugeot, Citroen and Fiat, had committed to making electric cars in the UK, but says that is under threat.
It said it can no longer meet Brexit trade rules on where parts are sourced.
The government is “determined” that the UK will remain competitive in car manufacturing, a spokesperson said.
“If the cost of electric vehicle manufacturing in the UK becomes uncompetitive and unsustainable, operations will close,” Stellantis said.
It is the first time a car firm has openly called on the government to renegotiate the terms of the Brexit trade deal.
It called on the government to come to an agreement with the EU to keep rules as they are until 2027, and it also wants arrangements for manufacturing parts in Serbia and Morocco to be reviewed.
Just two years ago, the world’s fourth biggest car maker said the future of its Ellesmere Port and Luton plants was secure.
But now Stellantis has asked the UK government to renegotiate part of the Brexit deal amid a “threat to our export business and the sustainability of our UK manufacturing operations”.
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.
These 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, later rising to 65%.
Stellantis said it was “now unable to meet these rules of origin” after the surge in raw materials costs during the pandemic and energy crisis.
If the government cannot get an 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, it said.
“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 said that Business and Trade Secretary Kemi Badenoch “has raised this with the EU”.
Ms Badenoch, who will meet with Stellantis executives today, “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 spokesperson said.
The government has set up a fund to develop the supply chain for electric vehicles, and in the coming months will take “decisive action to ensure future investment in zero emission vehicle manufacturing”, the spokesperson added.
But Labour’s shadow business secretary Jonathan Reynolds said manufacturers had been let down by a “government in chaos”.
He said that “the jewel in the crown of British manufacturing is at risk without urgent action from the government”, promising that Labour “will work with industry to build the gigafactories we need”.
The deal on electric cars and batteries was one of the very last issues settled in Brexit negotiations between Boris Johnson and Ursula von der Leyen in 2020.
The Stellantis document warns that uncompetitive electric vehicle costs will mean “manufacturers will not continue to invest” and will “relocate manufacturing operations outside of the UK”.
It then lists Ford, and BMW’s electric Mini, as well as Honda’s investment in the US after closing its UK site in Swindon.
The core problem remains a lack of UK battery plants, and a domestic supply chain that should be being built now, but is being dwarfed by developments elsewhere.
At a time of some uncertainty over UK trading arrangements, now the US, China and the EU are pouring subsidies into this market.
The industry-wide fear is that the UK is missing out on a once-in-a-generation tidal wave of investment around the electrification of cars.