Post-Brexit Tariffs And EV Chain Woes Threaten UK Carmakers

Failure to bolster the supply chains for electric cars, coupled with looming post-Brexit tariffs, could cost the UK’s car industry over £100bn in growth, a leading industry group has warned.

A potential 10-fold increase in the production of electric cars worth £106 billion is as it stake, according to a new report from the Society of Motor Manufacturers and Traders’ (SMMT).

Unless the government invests in British manufacturing plants, helps to scale up their EV supply chains and reworks the incoming export tariffs created by the UK-EU trade deal, the UK’s automotive sector will become “uncompetitive” in the face of “fierce global competition”, the SMMT said.

New EU post-Brexit rules, which come into effect in January 2024, will place tariffs of 10 percent on exports of electric cars between the UK and the EU if at least 45 percent of their value does not originate in the UK or EU.

Mike Hawes, SMMT’s chief executive, said: “The government has set the industry tough targets and we are committed to meeting them.”

“But we are in the middle of the most fiercely competitive investment landscape of a generation and need a UK response, urgently, using every policy, every fiscal and regulatory lever, to make Britain the most attractive place to invest,” he said, speaking at the group’s annual summit today.

“The automotive industry rises to every challenge, so we set out today a challenge to all political parties: back us with the right conditions and we will turn our obligations into opportunities for our industry, for jobs, for the environment and for the UK,” he said.

The calls come after a roller-coaster start to the year for Britain’s automotive industry, which has seen the government come under fire for risking the UK’s position in the global EV race.

In May, Vauxhall-owner Stellantis and other major car manufacturers warned that the new tariffs could put UK factories at risk. 

Hawes warned today that the entire sectors growth was also “now at risk” from such tariffs.

The sector is also waiting to hear whether the UK has pipped Spain in the battle to secure a new ‘gigafactory’ built by Jaguar Land Rover’s owner Tata.

The outcome has been touted by some as pivotal in securing the future of Britain’s EV sector, although one industry source told City A.M. that many believe the government has already missed the boat.

The SMMT also warned that Britain’s automotive industry was being further pummelled by ongoing inflation and high energy costs, with more than 80 percent of companies in the sector informing the trade group that rising input costs were limiting profitability despite rising demand.

By CityAM

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