LONDON — Ford called for post-Brexit EU trade requirements on rules of origin for electric vehicles to be delayed until 2027 from 2024, saying tariffs will add pointless costs for consumers and slow the transition to electric.
“Ford is calling for current trade requirements to be extended to 2027, to allow time for the battery supply chain to develop in Europe and to meet EV demand,” the U.S. carmaker said in a statement.
“Tariffs will hit both U.K.- and EU-based manufacturers, so it is vital that the U.K. and EU come to the table to agree a solution,” the company said.
Ford is investing 380 million pounds ($480 million) to build e-motor capacity at an engine plant in Halewood near Liverpool, England, part of electrification plans across Europe.
Ford’s statement comes after Vauxhall owner Stellantis, which has two plants in the UK, warned that British car factories will close with the loss of thousands of jobs unless the Brexit deal is swiftly renegotiated.
Under the trade deal agreed when Britain left the bloc, 45 percent of the value of an EV being sold in the European Union must come from Britain or the EU from 2024 to avoid tariffs.
The problem is that a battery pack can account for up to half a new EV’s cost. Batteries are also heavy and expensive to move long distances.
Ford warned that the car industry in the U.K. does not have enough locally-sourced batteries and components to meet demand.
“Tightening the trade rules at this point risks undermining the switch to EVs with tariffs,” Ford said. “Manufacturers who have invested heavily early in the transition will be hardest hit by tariffs because combustion engine vehicles will continue to move tariff-free.”
‘Watch this space’ on battery output
Britain said it was in talks with Brussels. “We hope to be able to come to a resolution with the EU on this,” Prime Minister Rishi Sunak’s spokesman told reporters on Wednesday.
Auto manufacturers say that as well as renegotiating tariffs, Britain needs to attract more battery production to secure the future of its car industry.
British finance minister Jeremy Hunt hinted there would soon be a development on that front.
“Watch this space, because we are very focused on making sure that the U.K. gets EV and manufacturing capacity,” he told an event on Wednesday.
UK industry’s existential crisis
Experts have been warning since Britain left the EU at the end of 2020 that without a number of EV battery gigafactories the country could lose a hefty chunk of its car industry.
Only Japan’s Nissan has a small EV battery plant in Sunderland, with a second one on the way.
Britishvolt, a startup which received U..K government support for a 3.8 billion pound ($4.80 billion) battery plant at a site in northern England, filed for administration in January after struggling to raise funds.
The company was then bought by Australia’s Recharge Industries, which has yet to unveil plans for the site.
Andy Palmer, former Nissan chief operating officer, told BBC radio that urgent action was required.
“The cost of failure is very clear. It’s 800,000 jobs in the UK, which is basically those jobs associated with the car industry,” said Palmer, who is also chairman of European battery manufacturer InoBat.
“If you don’t have a battery capability in the U.K., then those car manufacturers will move to mainland Europe,” Palmer said.
ACEA: Supply chain ‘not ready’
Europe’s auto industry trade body, ACEA, also called on the European Commission to extend the phase-in period, saying the supply chain was simply not ready yet.
The warnings come as carmakers globally are selecting sites to build new battery gigafactories.
Last week Tata Motors, owner of Jaguar Land Rover, said it had not decided on a location for a new battery plant but advanced talks were underway. Reuters reported in February that Tata was considering building an EV battery plant in Spain or Britain.
Stellantis announced a 100 million pound ($126 million) EV investment in its Ellesmere Port site in 2021. It said it had believed then that it could create enough parts in Britain or Europe to meet the post-Brexit rules, but is now unable to do so.