The British car manufacturing industry reported a 40% production capacity growth in September 2023, the Society of Motor Manufacturers and Traders’ latest data revealed.
However, the imminent imposition of new Brexit rules may hamper the industry’s potential for further growth. According to ShareCast, it can boost electric vehicle prices by more than £3,000 in the UK and EU.
Car manufacturing sector’s September 2023 performance
SMMT revealed that car manufacturing in the UK surged 39.8% YoY last month to 88,230 units, recording its best month in 2023. Year to date, the figure has already reached 659,901 (up 14.9% YoY).
Export vehicles reportedly had a 32.2% YoY growth to 64,727 units. Meanwhile, local deliveries surged 65.9% YoY to 23,503 units.
Moreover, electric vehicle production also increased by 41.5%. However, the threat posed by the looming Brexit rules raises significant concern in the industry.
That said, the UK and EU Governments must take immediate measures to ensure reliable and competitive trading.
“A particularly strong period of car making is good news for the UK, given the thousands of jobs and billions of pounds of investment that depend on the sector. With countries around the world shifting to zero-emission motoring, Britain is well placed to be a global EV manufacturing hub if the investment and trading conditions are right.”
Mike Hawes, SMMT Chief Executive
SMMT demands government to delay Brexit rules
SMMT calls for the government to extend the tariff-free trade under the UK-EU Trade Cooperation Agreement (TCA) by three years, citing the electric vehicle trade’s growing significance with mainland Europe.
For context, the current tariff-free trade is set to expire by January 2024 with the arrival of more stringent “rules of origings” for EV batteries.
SMMT warned that the new Brexit rules will impose a 10% tariff that may increase the average price of UK-made all-electric vehicle models by £3,600 in Europe.
Meanwhile, EU-made models’ average cost will surge by £3,400 in the UK.
“Given the increasing importance of electrified car production, the first and urgent step is for the UK and EU to agree to delay the tougher rules of origin requirements that are due imminently. This would give the necessary breathing space for automotive sectors on both sides of the Channel to scale up gigafactories and green supply chains, both of which are essential for a stable, long-term transition.”
Mike Hawes, SMMT Chief Executive
New rules of origin
According to Sky UK, the new rules of origin that will go into effect in January 2024 mandate that at least 45% of the EV’s value must originate in Europe or the UK.
Failure to comply will result in the abovementioned trade tariffs of 10%, which equates to a £3,600 EV price hike in Europe and £3,400 in the UK.
“Almost one third of drivers say they are put off electric cars due to the higher purchase price. It is essential that the rules of origin for batteries coming into force in January should be delayed to allow time for EU and UK gigafactories to come on stream. Without this consumers will be hit with an extra £3,600 cost on electric vehicles built in the UK which will be bad for the economy and the environment.”
AA President Edmund King (via The National)
All that said, the EU and UK Governments must come up with immediate but effective solutions to address the current concerns of electric vehicle players in the region. As EV-a2z previously reported, multinational automaker Stellantis has already warned to shut down its UK-based production plants if the government fails to negotiate the looming Brexit tariff.
