Stellantis has warned it could be forced to shut down its UK factories if the Brexit deal is not renegotiated.
The leading carmaker, which owns Vauxhall, Peugeot, Citroen and Fiat, had previously committed to manufacturing electric vehicles in the UK but now says that plan is in jeopardy.
It expressed concerns about facing tariffs of 10 percent on exports to the EU due to regulations regarding the sourcing of parts.
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Stellantis called for an agreement with the EU to maintain the current trade conditions until 2027, with a review of manufacturing part arrangements in Serbia and Morocco.
This is the first time a car manufacturer has openly called for renegotiating the Brexit trade deal.
It is understood other major manufacturers in the UK have raised similar concerns with the government.
Stellantis emphasized if electric vehicle production costs become uncompetitive and unsustainable in the UK, operations could be forced to close.
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The car giant urged the UK government to reach an agreement with the EU to preserve the status quo and ensure the continuity of its manufacturing operations.
However, the government spokesperson assured they would take decisive action to secure future investments in the industry.
The current trade rules stipulate starting next year, 45 percent of the value of an electric car must originate from the UK or EU to qualify for tariff-free trade, increasing to 65 percent in 2027.
Stellantis expressed difficulty meeting these rules of origin due to rising raw materials and energy costs.
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The company warned its UK-made cars would be subject to 10 percent tariffs from next year without an agreement to maintain the current rules.
It makes the UK less competitive than Japan and South Korea.
Stellantis’ warning highlights UK manufacturers’ challenges due to Brexit, including trade barriers and the lack of domestic battery manufacturing capacity.
Experts have emphasized the need for the UK to develop its battery industry to remain competitive in the electric vehicle market.
Failure to do so could result in UK exporters being unable to sell cars overseas without tariffs, severely impacting the industry’s growth and viability.
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