European car manufacturers have warned the UK government to renegotiate its Brexit arrangements with Europe or risk losing thousands of jobs in the UK.

In May, the world’s third largest carmaker Stellantis (which owns brands such as Citroen, Peugeot and Vauxhall) warned that it would face stiff tariffs in 2024 when exporting electric vans to Europe when new rules bite. 

Flat battery

The situation has been made worse because the UK has failed to attract battery production to Britain.

The current trade deal says that 45 per cent of the value of an electric vehicle (EV) being sold in the European Union must come from Britain or the EU from 2024 to avoid tariffs. “The problem is that a battery pack can account for up to half a new EV’s cost,” according to Reuters news agency. “Batteries are also heavy and expensive to move long distances.”

Those companies who fail to reach the 45 per cent threshold face additional tariffs of 10 per cent. Carmaker Ford requested an extension to complying with the rules until 2027. The European Automobile Manufacturers’ Association, the auto trade body, has also asked the EU to extend the deadline, arguing that the supply chain is not ready.

Wider issues

Ola Källenius, the head of German carmaker Mercedes-Benz, said that the battery problem extended to other parts of the battery supply chain throughout Europe. The company is planning to build four car battery plants, the first of those in northern France in a partnership with Total Energies and Stellantis, according to the Financial Times.

But the paper said that Europe’s car industry lags that of China and South Korea, where major investment in battery production has made those regions the main suppliers of EVs globally.

China has six out of the ten biggest players in the EV battery industry, accounting for a 60 per cent share of the market.