Everyone wants a piece of the electric vehicle market. Auto manufacturing is not only a huge employer, but has long symbolized the manufacturing prowess of a nation, from British Minis to Italian Ferraris. As the sector goes electric to meet climate change targets, the US, EU and China have been locked in a race to build domestic electric vehicle production capabilities. In the frenzy of subsidies and deals, electric carmakers must decide how best to position their complex supply chains.

Last week, world car manufacturer stellantis — which owns brands including Vauxhall, Peugeot and Citroën — has warned UK lawmakers that it may have to close one of its electric van factories. He fears that production will soon become uncompetitive. From 2024, as part of the post-Brexit trade deal, electric vehicles traded between the UK and the EU will have to have 45 per cent of their parts sourced from either region or face 10 per cent tariffs. british and European car manufacturers they say they are not ready and worry about being displaced in each other’s market.

While the so-called “rules of origin” regulations were clear when the Brexit deal was struck, automakers say the Russian invasion of Ukraine and supply chain turmoil since then have altered cost dynamics. The battery factories on both sides of the canal will also be installed later than expected when the rules were established. The rule itself acts as a major stick for auto and policy makers to invest in building a thriving domestic EV ecosystem. But if manufacturers feel this is not in place, the rules also risk hurting the sector just as the US and Chinese Inflation Reduction Act are drawing them in. It could even mean EVs traded between the UK and Europe face tariffs while petrol vehicles do not, keeping EVs more expensive for longer. That would not be ideal for the green agenda.

At this stage, an extension of the 2024 deadline, as the companies are calling for, may make sense. But automakers and governments shouldn’t use it as an excuse to further delay action. In fact, the UK, which is further behind Europe in the EV space, needs to recognize that tariffs are only one element of the larger effort required to build a competitive EV system.

The batteries, which also face local content regulations, comprise a significant part of the total cost of electric vehicles. But the UK has just a handful of battery gigafactories in its prospective pipeline, compared to Europe’s 30. Attempts to woo Asian battery makers and nurture the locals have failed: Britishvolt collapsed. in January. Batteries also need critical minerals and refining processes in place. The US and the EU are pouring money into this. The UK lags across the entire supply chain, even before broader issues such as its high energy and logistics costs are taken into account.

Building a thriving battery and electric vehicle industry requires joint, long-term thinking across all sectors. To date, that is lacking in the UK. The government eschews the notion of an industrial strategy altogether, and recent political turmoil hasn’t helped. He has left himself pursuing independent businesses and brussels lobby — an ineffective approach compared to the billions being pledged in the US and Europe. For electric carmakers, Britain doesn’t look like a serious long-term bet.

In the end, waiting for the European Commission to delay regulations is not a strategy, neither for UK carmakers nor for European ones. The EU may have an incentive to postpone stricter requirements, being ahead of the UK in the sector. But, equally, I could judge that with the damage likely to be higher in the UK that its own auto industry, given the UK’s increased reliance on car exports to the bloc, keeping it in place could help attract business across the Channel. Either way, the global battle for electric vehicles is shaping up to be fierce, and those without strategic focus will be left behind.

Leave a Reply

Your email address will not be published. Required fields are marked *