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Vauxhall owner threatens to close UK factories in Brexit row

Vauxhall A photographer takes a picture of a new electric van at Vauxhall's plant in Ellesmere Port, Cheshire, which is to become parent company Stellantis's first manufacturing facility dedicated to solely battery-electric models, in both commercial and passenger versions, by the end of next year, for Vauxhall, Opel, Peugeot and Citroen brands and for both domestic and export markets. Picture date: Tuesday July 6, 2021. (Photo by Peter Byrne/PA Images via Getty Images)
Electric vans made at Vauxhall’s Ellesmere Port site will face tariffs of 10% when exported to mainland Europe from next year. Photo: Peter Byrne/PA Images via Getty (Peter Byrne - PA Images via Getty Images)

One of the world's largest car manufacturers has called on the UK government to renegotiate its Brexit deal with the EU or said it may have to close factories in Britain.

Stellantis (STLA), which owns Vauxhall, Peugeot, Citroen and Fiat, had committed to making electric cars in the UK, but says that is now under threat. It said it can no longer meet Brexit trade rules on where parts are sourced.

"If the cost of electric vehicle manufacturing in the UK becomes uncompetitive and unsustainable, operations will close," Stellantis warned.

The company committed to making electric vehicles at its Ellesmere Port and Luton plants two years ago.

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But in a submission to a Commons inquiry, Stellantis said the Brexit deal was a “threat to our export business and the sustainability of our UK manufacturing operations”.

It called on the government to agree with the EU to keep existing rules until 2027, scrapping next year’s planned changes which state 45% of an electric car’s value should originate in the UK or EU to qualify for trade without tariffs.

Read more: UK households paying £1.1bn more for energy bills after Brexit

Under the 45% of parts by value rule, electric vans made at the Ellesmere Port site will face tariffs of 10% when exported to mainland Europe from next year because they do not have enough locally sourced parts, putting the future of the plant at risk, the company said.

Ellesmere Port, which is due to start electric vehicle production later this year, employs 1,000 workers, while 1,200 are employed in Luton making Vauxhall and Fiat vans.

Business and Trade secretary Kemi Badenoch has raised the issue with Brussels, the government said, and she has a pre-arranged meeting with Stellantis chiefs.

Professor David Bailey, from Birmingham Business School, said: “I think there is a kind of existential threat to the UK car industry.”

He told BBC Radio 4’s Today programme: “Car makers have been saying for some time, they can’t meet those rules as they tighten up, and they’re going to potentially be facing tariffs.”

Meanwhile, the Labour leader told BBC Breakfast that although re-entry to the EU was not on the table “we do need to improve that deal”.

Read more: Brexit and political turmoil costing the UK billions as investors turn away

“Of course we want a closer trading relationship, we absolutely do. We want to ensure that Vauxhall and many others not just survive in this country but thrive,” Sir Keir said.

“Because there are jobs bound up, there are families watching this morning either employed by Vauxhall or a similar place who are deeply worried about what this means.

“So yes we need a better Brexit deal. We will make Brexit work. That doesn’t mean reversing the decision and going back into the EU but the deal we’ve got, it was said to be oven-ready, it wasn’t even half-baked."

Watch: Starmer would seek 'improved' Brexit deal as car-making giant warns on UK future

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