Alan Thornett writes about another Brexit chicken coming home to roost with a vengeance.
The electric vehicle (EV) multinational Stellantis – the third biggest car-maker in the world measured by sales and which employs over 5,000 workers in Britain in Ellesmere Port and Luton – has put the boot into the future of car making in the UK bigtime. It has warned the British government that it will close its UK operations down unless the trade rules negotiated by Britain under its Brexit agreement are fundamentally changed.
Stellantis was formed in 2021 on the basis of a merger between the Italian-American conglomerate Fiat Chrysler and France based Peugeot. It’s trading brands include Alfa Romeo, Chrysler, Citroën, Dodge, DS, Fiat, Fiat Professional, Jeep, Lancia, Maserati, Mopar, Opel, Peugeot, Ram, and Vauxhall and Abarth. It is currently redeveloping its Ellesmere Port site to build electric vans, including the Vauxhall Combo, Citroën Berlingo, Peugeot Partner, and the Opel Combo.
There are two, distinct but crucial, issues involved in this.
The first is the trading rules agreed by the UK under the ‘Rules of Origin’ (of components) clause of the Brexit agreement, that will come into force next year. This requires that 45% of an EV’s components are sourced from the UK or EU, otherwise the car will be subject to a deal breaking 10 per cent tariff – £5,000 on middle range car. These terms were signed-off for Britain by Lord Frost, its chief UK negotiator, in December 2020,
In a blunt submission to the UK government Stellantis has warned that : “If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, our operations will close.” It added: “Our request to the UK government is to gain agreement with the EU to maintain the current Rules of Origin until 2027.”
Unless this rule is “renegotiated” (i.e. scraped) no multi-national car manufacturers will ultimately continue to invest in the UK, as has already been the case BMW. According to the Guardian, Ford, which has invested £380m growing its e-motor capacity at its plant in Halewood has also issued a statement calling for the three-year delay to the rule change while the UK and EU improve their battery production capacity.
The other issue involved (which Ford references above) is the matter of EV battery manufacture. It has long been clear that volume EV production is not sustainable without adequate local battery manufacturing capacity, and that means gigafactories, since the economics of EV production requires that battery manufacture takes place close to vehicle assembly. This implies that without at least one gigafactory (and eventually two or three) large scale long-term EV production is not going to happen in the UK.
There were plans for at least one gigigafactory, which was Britishvolt’s £3.8 billion lithium-ion EV battery in Blyth in Northumberland. This, however, collapsed in January (of this year), before completion, through lack of funding. My previous article on the collapse of Britishvolt can be found here.
UK business secretary Kemi Badenoch is apparently seeking a meeting with the EU to change the agreement Britain signed in 2020. It won’t be easy. The EU is likely to remind here that she and the UK wanted Brexit and now you have to live with it, unless she has some major concessions to make in return.
The UK government has been massively behind the curve on the EV transition. It is the last of all those countries with significant automotive production capacity to recognise the dynamic of the EV revolution and what is taking place. There is now an international scramble going on for battery capacity that they don’t even seem to be aware of.
For example, “battery valley” is being established in France – with four initial gigafactories – as reported in yesterday’s Guardian:
“Emmanuel Macron’s announcement last week that the Taiwanese battery maker ProLogium had chosen Dunkirk for its first foreign facility brings to four the number of gigafactories planned in a corridor stretching about 60 miles inland from the port.
“We’re going all in on this,” said Xavier Bertrand, the head of the Hauts-de-France region, once home to many of France’s coalmines and much of its steel industry, which has spent more than €200m (£174m) – on top of huge state subsidies – ensuring the investments came its way rather than to rival sites in Poland, the Netherlands and Germany.
“We’re in advanced talks with other major players in the sector, too – graphite processing, recycling,” Bertrand told AFP. “The aim is to have the whole chain here; it’s a strategic choice. This is a decade of transformation and we absolutely need to be in the vanguard.”
It is not a matter of replacing every combustion engine car with an EV, of course, since the world needs less cars overall, but EVs are superior to internal combustion cars at every level in terms of the protection of the planet they produce dramatically less emissions/pollution and they are the fastest way available in terms of a major reduction in global carbon emissions. Electric power has always been superior to the combustion engine but has been preserved by the oil lobby.
The trade unions in the UK stand aside from all this at their peril. Battery gigafactories have to be built rapidly in this country and the Brexit agreement changed if car manufacture is to continue. A good start in this is to support the call for a trade union conference of the future of the car industry. An article by Rick Hatcher from Birmingham Against the Cuts, calling for such a trade union conference can be found here.
Alan Thornett May 20th 2023.