EU’s proposed Industrial Accelerator Act could exclude UK-built EVs, with significant ramifications
Sorry to rake over a painful subject, but we need to talk about the continuing disastrous effect of Brexit on the UK automotive industry.
Car makers operating in the UK were always opposed to Brexit, mainly because it made life a lot more complicated. And another complication has now arisen from confusion about the EU’s proposed Industrial Accelerator Act (IAA), which is designed to protect its industry from Chinese rivals with a series of benefits for EVs built within the bloc.
The IAA was attacked by the UK’s SMMT for being “poorly drafted”. Indeed, in its current form, it’s hard to work out whether UK-made EVs will be excluded from two key incentives or all four. Maybe it will be cleared up as wrangling continues and maybe, like the post-Brexit EU-UK Trade and Cooperation Agreement, it will be negotiated in our favour, with EVs such as the Nissan Leaf being defined as “Union-assembled”.
But it’s the uncertainty that’s the killer. Global car makers are continually assessing where to locate production, and right now, as from 2016-2020, they can’t be sure if the UK will be a sensible place to do business.
Nissan is largely locked in and our luxury car makers have too much invested in their Britishness to go elsewhere, but this could gravely affect BMW’s decision to finally bring an electric Mini to Oxford, as well as the future of Toyota’s Burnaston plant.
This isn’t the only question mark. As it was in 2023, the ‘rules of origin’ element of the Trade and Cooperation Agreement is due to hit a cliff edge at the end of the year, stipulating a much tougher local parts content (UK or EU) of 55% to remain tariff-free. That will probably be renegotiated so as not to punish those EU-built cars with batteries from abroad, but again we don’t know.
It’s not even controversial any more to say Brexit was bad for our car industry. Just look at the production figures, down from a high of 1.7 million in 2016, the year of the vote, to 764,715 last year.
There are benefits to being outside the EU. For example, we can be more flexible when it comes to the shift to EVs, even if it’s not as flexible as some would like. And we have a better tariff deal on cars with the US. But our unmoored state leaves us more vulnerable to global shifts, and the rise of the Chinese car industry is one of the biggest shifts the industry has ever seen. If the EU does close its doors, we will be very exposed indeed.
