Vauxhall owner warns it could end UK carmaking if the government’s Brexit deal isn’t changed

The owner of the car giant Vauxhall - which employs thousands of people in the UK - has said it won’t be able to honour its commitment to make electric vehicles in Britain unless the government’s Brexit deal is changed.

Stellantis - the world’s fourth biggest carmaker which also counts Citroen, Peugeot and Fiat among its brands - told a House of Commons inquiry that the terms of the deal on where parts are sourced meant its UK plants would be at a “competitive disadvantage”.

What does the Brexit deal say about carmaking?

Electric cars and batteries were among the final parts of the deal agreed between Boris Johnson and European Commission President Ursula von der Leyen in 2020.

At the moment, 40% of the value of an electric vehicle needs to come from the UK or the EU to avoid tariffs - the taxes imposed on goods imported or exported between countries. From next year, these so-called “rules of origin” rise to 45%. Crucially, if carmakers exceed this figure, they’ll have to pay a 10% tariff.

What has Stellantis said?

Writing to the Commons Business Committee, in a document first reported by BBC News, Stellantis says it can’t meet the higher “rules of origin” requirement because the cost of raw materials has soared as a result of the pandemic and energy crisis. It warns that the changes will make domestic production and exports uncompetitive with countries like Japan and South Korea.

Crucially, it calls the changes a “threat” to the viability of Stellantis’ UK plants. “To reinforce the sustainability of our manufacturing plants in the UK, the UK must consider its trading arrangements with Europe “, it adds.

Stellantis says there’s also “insufficient battery production” either in the UK or Europe to meet government targets to phase out petrol and diesel vehicles in the coming years. The sale of new ones is due to be banned in 2030. Stellantis currently employs more than 5,000 people at plants in Luton and Ellesmere Port in Cheshire - where two years ago it committed to making an all-electric vehicle.

What have others said?

Shadow Business Secretary Jonathan Reynolds said: “These are issues that ministers should have seen coming and been proactive in addressing, instead we have a Government in chaos.”He told the Commons: “Will this Government wake up, grab the steering wheel, and get control of the situation before it is far, far too late?”

Earlier this week, former Brexit Party leader Nigel Farage told the BBC’s Newsnight programme that the UK’s departure from the EU had “failed” - accusing the Conservatives of mismanaging the process.

Downing Street said it disagreed with Farage’s characterisation, and pointed to new freedoms in the British farming sector as an example of how Brexit had allowed the UK to better tailor its policies.