The UK car industry is facing a menace that many have failed to anticipate in the admittedly complicated context of the Brexit negotiations. The UK obeys to a special “Rule of Origin” requiring car manufacturers to source most of their EV components from within the continent. Sourcing the batteries from Europe can be a challenging feat after the Brexit, as the trade between the two entities is about to become quite complicated.
Ignoring the requirement and importing EV batteries from China for example wouldn’t solve the problem as according to the relevant and applicable law, that would result in 10% tariffs being added as a disincentive. So, it appears that UK-based car makers are stuck in the mud, and the government has so far failed to present a viable long-term plan that would light the path out of the dire situation.
Right now, European countries are fast-tracking their EV manufacturing and infrastructure plans whereas the UK sees no investor interest in the field. Simply put, there’s no reason for someone to set up a new EV factory in the UK, while there are numerous compelling reasons to do so elsewhere. BritishVolt is the only entity to have presented their tentative plans to build a battery gigafactory in the UK to produce 15GW of batteries per year, but these plans are still at the “site selection” stage.
If Britain was to lose its car industry, that would translate to the purging of 200,000 jobs and an annual production of 1.3 million cars. Apart from the jobs, supplying your own country with homegrown production brings a multitude of economic advantages, and it also creates exportation potential. Right now, Nissan is making EV components for the Leaf in Sunderland, one of the best selling cars of its kind across Europe.
The percentage of EV components to be sourced from the EU is set at 55%, which is highly problematic for the local industry. It is possible that the UK government will negotiate the lowering of this percentage down to 30%, which was the figure they attempted to agree upon during the November 2020 Brexit negotiations, but sadly failed.