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The UK car industry feels that Brexit problems are far less than expected – News

FIVE YEARS Immediately after Britain voted to leave the European Union (EU), Japanese car maker Nissan warned that the future of its factory in Sunderland is doubtful. On July 1, the company announced a £ 1 billion ($ 1.3 billion) investment in a new battery plant that would secure the future of the plant. Also on July 6th, another motor maker, Stellantis, announced that it would invest £ 100m to produce electric vans at Ellesmere Port.Further news is expected soon BMW And Toyota.Trade agreement signed by the UK EU In December 2020, and spectacular government cash, bosses are thinking less about raising sticks and more about the benefits of post-Brexit regulatory freedom.

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Before the vote, the UK car industry was on track. In 2016, production exceeded 1.8 million units, reaching the highest level in 20 years. By 2016, the UK will be one of the most productive automakers in Europe, measured by the number of vehicles per employee, with approximately 160,000 employees producing approximately 11 vehicles each year. I am. EU Less than 8 on average. Brexit has put this at risk by making it difficult to transport parts across national borders.

Modern automobiles are the result of a complex international production process. There are typically about 3,000 components. For cars assembled in the United Kingdom, only about 40% of these components are produced domestically.Crankshaft BMW The Mini goes through the channel three times before being installed in Oxford.Four out of every five British cars are exported, more than half of which EU.. Nissan opened its Sunderland plant in 1986. This is partly due to the prospect of labor market liberalization and easy access to Europe.Since others followed, and failed MG In 2005, Rover was a foreign-affiliated company for all volume makers in the United Kingdom.

Trade cooperation agreement (TCA) With the UK EU It didn’t provide everything the industry wanted, it was approaching. Trade can continue with almost no tariffs or quotas. Customs checks and fees create some friction, but they are minor compared to the 10% tariff threat under the rules of the World Trade Organization if the transaction fails.

The requirements of the “rule of origin” are more complicated. These are intended to prevent companies from importing goods from third countries and re-exporting them as if they were domestically produced. For the purpose of tariffs TCA Treat with the UK EU As a single block. However, this excludes countries such as Japan that both have trade agreements. Percentage of components by values ​​originating from or outside the UK by 2027 EU If you want to avoid tariffs, you should reduce it to 45% on most cars.Manufacturer to sell at EU And with a supply chain that extends to Asia, you have the option of shifting from the UK or doubling it. They are making different calls. Nissan is investing in the UK. Honda will close its Swindon plant next year.

This is all in line with the industry-wide reinvention as automakers move to electric vehicles. Like the engine of a gasoline car, the battery is expensive. “If you don’t procure batteries domestically, you don’t know how to maintain compliance,” says the production manager. The UK currently does not have a so-called “Gigafactory” for mass production (a term coined by Tesla’s Elon Musk).

Joint venture with Nissan’s new plant, Envision AESC, Chinese companies have 9 gigawatt hours (GWh) Enough to power 100,000 vehicles each year by the mid-2020s.Capacity can reach 25 GWh Until 2030. Britishvolt, an independent consortium of battery manufacturers, plans a capacity of 30. GWBy the end of h10.But when both are put together, it never reaches 60 GWThe Association of Automakers, an industry group, believes it will be needed by 2030 to produce the same number of cars as it does today.

In the midst of turmoil, the UK government is spying on opportunities to influence automakers thinking about where to invest. The “Super Deduction,” a particularly generous time-limited tax deduction announced in the March budget, allows businesses to reduce taxes by up to 25p for every £ 1 of their capital investment this fiscal year and next year. Claimed as a pandemic recovery measure, it is more commonly seen as “a huge grant to cover the cost of the supply chain adapting to Brexit,” the accountant says. Cash is also being splashed. Nissan and its partners will receive approximately £ 100m of direct subsidies from the Sunderland City Council for the new Gigafactory, in addition to £ 80m to build energy grids that connect to wind farms and solar parks.Such measures are taken by the United Kingdom EU— But it may not have been necessary.

Power play

It’s rather pleasing to those who wanted Brexit to mean bureaucratic formalism rather than more distribution, and climate change goals and new technologies provide an excuse. Automakers believe the UK government will be more agile and positive when it comes to regulating electric and self-driving cars. European regulators, who have to tie up among 27 countries, are always moving slowly. In addition, they will be lobbied by a major German automaker, where reinventing the industry is a serious threat. Industry bosses have already promised that the UK will ban the sale of new diesel and petrol cars by 2030, while EU We are still discussing banning them from 2035. Big car companies are putting pressure on it to move even slower.

Overall, Brexit can still have a negative impact on the UK economy and reduce its potential growth rate. But with fewer barriers to subsidies, tax cuts and innovation, it means that for automakers, living outside the block is more comfortable than they once feared. ■■

For more information on Brexit-related issues, please visit: Brexit hub

This article was published in the UK section of the print edition under the heading “Pedal to the metal”.

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