Supply chain fears prompt UK government plea from Vauxhall owner

Stellantis has said it is no longer able to satisfy regulations made under Brexit regarding where car parts are sourced. The group, which owns Fiat, Citroen, Peugeot and Vauxhall is locked into a deal that would see it produce electric cars in the UK.

”If the cost of electric vehicle manufacturing in the UK becomes uncompetitive and unsustainable, operations will close,” Stellantis said in a statement. In response, the British government has underlined its determination to build a competitive car manufacturing industry on its shores.

As part of the called-for review, Stellantis wants a reconsideration of the current arrangement that sees manufacturing parts brought in from Morocco and Serbia.

The firm had asked the government to allow pre-Brexit rules to stay in place up until 2027, but it now perceives a “threat to our export business and the sustainability of our UK manufacturing operations”. The warning is a removal from the firm’s outlook two years ago, when it proclaimed the future stability of plants at Luton and Ellesmere Port in England.

Stellantis underlined how its investments in Britain had been made in line with tough terms laid out in the post-Brexit trade agreement. The terms stipulate that 45% of an electric car should come from the UK or EU in order to be eligible for tariff-free trade – a percentage point that will increase to 65 at a future date.

Stellantis says it is now unable to meet the regulations on car-parts origins owing to costs that have spiralled as a result of the global health crisis and the energy crisis. As of next year, the firm says, trade between Britain and the EU will be hit by a 10% tariff, unless the UK government can arrange for current rules to stay in place for the next four years.

”To reinforce the sustainability of our manufacturing plants in the UK, the UK must consider its trading arrangements with Europe” Stellantis said.

Speaking on behalf of the UK government, Business and Trade Secretary Kemi Badenoch said the issue has been brought up in EU discussions, and emphasised determination to “ensure the UK remains one of the best locations in the world for automotive manufacturing, especially as we transition to electric vehicles.”

Westminster has formed a new fund to help support the electric vehicle supply chain in the UK, and has said that “decisive action” will take place in the months to come “to ensure future investment in zero emission vehicle manufacturing.”