Stellantis calls for renegotiated trading arrangements with EU

The company, the world’s fourth largest automotive manufacturer with around 5,000 UK employees, made this stark warning in a written submission to a Commons inquiry into electric car production.

In the UK, Stellantis has committed its manufacturing plants in Luton and Ellesmere Port to EV production, with electric small vans being built in Ellesmere Port in the first half of 2023. By 2030 the company is targeting all vehicle sales in Europe to be battery electric. 

In its submission, the company said there will not be enough battery production supplies in the UK or in Europe by 2025 and 2030, ‘despite the fact this is key to meet the Trade and Cooperation Agreement under the current Rules of Origin.’

Rules of Origin are part of the Trade & Cooperation Agreement (TCA) agreed between the UK and EU. The TCA allows goods traded between the UK and the EU to be carried out at zero tariffs and zero quotas if the goods ‘originate’ in the UK.

Rules of Origin stipulate the proportion of a product in value terms that need to be created in the UK or the EU for the product to be classed as a product originating from the UK/EU, limiting the proportion of imports from outside the UK and the EU that can be used to create products.

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Currently, the battery in a battery electric vehicle accounts for between 40-60 per cent of the vehicle’s value, with minerals accounting for an estimated 60 per cent of battery cost.

“If we do not produce [batteries] in the UK or in Europe, we will be faced with 10 per cent import duties which will make domestic production uncompetitive against Asian players,” the company said.

From 2024 Stellantis expected to meet the Regional Value Content of the vehicles at 45 per cent to avoid import duties on trade between the EU and UK.

“Due to the various external headwinds, the prices of raw materials, which is all non-originating, increases substantially that we are now unable to meet these Rules of Origin,” the company said.

Stellantis is asking for the government to come to an agreement with the EU to maintain the existing Rules of Origin until 2027 and to review PEM rules, particularly with Serbia and Morocco.

“Much stricter rules will create significant challenges to bilateral trade of Electric Vehicles and batteries and with unachievable Regional Value Content targets,” stated the Commons submission. “Trade between the UK and EU would be subject to 10 per cent tariffs making exports uncompetitive in comparison to imports from Japanese and South Korean manufacturers.”