Stellantis cautions U.K. threats journey of E.V. production under post-Brexit powers

May 18, 2023: On Wednesday, Executives from Stellantis, the automaking giant behind brands including Peugeot, Chrysler and Citroën, are meeting with U.K. ministers to warn that post-Brexit trading arrangements severely risk its operations in the country.

Stellantis manufactures Vauxhall, Fiat, Opel and other vehicles across two plants in the U.K., employing more than 5,000 people. It plans to move toward majority and then 100% E.V. production as it rolls out electrification across its brands.

In a submission to an administration investigation into vehicle battery production, the company stated it would be at competitive limitations in the future because of tariffs imposed on batteries transported in the U.K. and mainland Europe.

“If the cost of E.V. manufacturing in the U.K. becomes uncompetitive and unsustainable, operations will close,” it said, citing previous decisions by BMW Group to relocate electric Mini production to China and investments by Honda in E.V. production in the U.S. following the closure of its U.K. site.

The E.U.–U.K. Trade and Cooperation Agreement gave battery and E.V.s a grace period before full Rules of Origin tariffs kick in, responding to these sourcing challenges. However, they will become progressively stricter in the coming years, rising to 45% and 65% in required domestic production. Automakers otherwise face 10% export duties on E.V.s.

Stellantis said that if it manufactures its batteries in China and mainland Europe in the coming years as currently planned, it will face “higher logistics costs” that threatens the “sustainability of our U.K. manufacturing operations.”

The company warned the U.K. needs a sufficient supply of the materials required to support vehicle battery production. While this is also a problem in mainland Europe, with many stores coming from China, Stellantis noted it had made huge investments in gigafactories in France, Germany and Italy and had a battery joint thing there.

It wants the government to negotiate with E.U. officials to maintain current rules until 2027.

It comes as the E.U. and its members ramp up focus on E.V. production with the form of the European Battery Alliance and plans to loosen state aid rules around green manufacturing in response to the U.S.’s landmark Inflation Reduction Act.

This week, French President Emmanuel Macron hosted Tesla CEO Elon Musk, trying to court investment in the country.

The U.K. has made a little progress on E.V. and battery production, with a large-scale lithium refinery planning for the north of England and Nissan building a storm gigafactory alongside a Chinese partner. Still, also instability, with battery maker Britishvolt rescued from administration.