Brexit ‘cliff edge’ threatens electric car production, warns industry boss

‘We can’t afford to have a last-minute 31 December agreement’, says automobile chief on January deadline

A post-Brexit “cliff edge” looming in January 2024 threatens the growth of Britain’s electric car production, an auto industry chief has warned.

The Society of Motor Manufacturers and Traders (SMMT) said the future of the UK’s industry was a stake unless a deal was struck with the EU to delay new tariff rules until 2027.

Rishi Sunak’s government has been warned of an “existential threat” posed by new rules of origin which will require carmakers to build more batteries in the UK.

Among the final parts of the Brexit deal agreed by Boris Johnson, changes set to come into force in 2024 state 45 per cent of an electric car’s value should originate in the UK or EU to qualify for trade without tariffs.

Calling for a three-year delay, SMMT chief executive Mike Hawes said on Tuesday: “There is huge potential for growth, and that growth is now at risk from tariffs.”

Mr Hawes told his organisation’s annual conference: “We’re saying basically suspend that requirement, and just let the regulation that’s currently in place flow through to 2027, which is the next threshold.”

He added: “We need to make sure those [tariffs] aren’t applied … We can’t afford to have a last minute, 31 December agreement, because business needs to plan its volumes.”

Business secretary Kemi Badenoch told the auto organisation’s conference that she had “heard very loud and clear the issues on rules of origin” and would raise it with Brussels ambassador to the UK.

In remarks reported by The Guardian, Ms Badenoch also accepted that “Brexit was more dramatic, I think, for this sector than many others”.

Trade secretary Kemi Badenoch says she will raise issue with EU (PA Wire)

Rishi Sunak has previously ordered talks with Brussels after Vauxhall’s parent company Stellantis warned in May that it will be unable to keep manufacturing in Britain without changes to the trade deal on tariffs.

Ms Badenoch said at the time she had raised the issue with her EU counterpart. But she had insisted that it was not a Brexit-related problem, and production of batteries was about “supply chain issues following the pandemic and the war in Russia and Ukraine”.

The SMMT warned again on Tuesday that the 2024 tariffs would make British-built electric vehicles “uncompetitive in our biggest export market, while pushing up EV prices for British buyers”.

The organisation called for political parties to commit to a tenfold rise in Britain’s annual production of electric vehicles to more than 750,000 by 2030. The organisation said it would mean £106bn worth of vehicles produce in the UK.

Louise Haigh, Labour’s shadow transport secretary, said the opposition would boost domestic electric vehicle battery production, saying it could create 30,000 new jobs.

She told the conference: “Labour are urging the government to prioritise an agreement with the European Union to ensure manufacturers have time to prepare to meet rules of origin requirements and make Brexit work for them.”

Meanwhile, chancellor Jeremy Hunt said talks on the UK participating in the Horizon Europe science programme have not stalled but are looking at “crunchy” financial details.

Asked about the negotiations during a visit to Brussels, the chancellor insisted they had not stalled” – but said any agreement on UK involvement would depend upon the benefit to taxpayers. He said the “optimal outcome” would be to find a way for participation in the programme to “work for the UK”.