Automakers in Europe risk losing any competitive edge if the U.K. manufacturers and suppliers are not allowed into the European Union’s Made in Europe proposal, which introduces regional material sourcing rules as part of the European Commission’s Industrial Accelerator Act.
That is one of the top-level findings of a recent report focusing on automotive supply chains, by the London School of Economics consultancy unit, announced in a Nov. 5 press release. It warns Europe’s legacy auto industry’s competitiveness is under mounting pressure from global competition from China-based brands, rising costs and battery dependencies as new trade barriers loom.
And the stakes are high: An estimated 1.37 million workers are directly supported by the vehicle manufacturing industry across both Europe and the U.K., according to The Society of Motor Manufacturers and Traders in the U.K, and millions more are reliant on the sector.
The SMMT also points out that mutual trading dependency sees the EU taking 60.4% of U.K. vehicle exports while 30% of EU exports go to the U.K, the biggest buyer of EU-built electric vehicles.
The LSE Consulting study backs calls from motoring representatives, including the SMMT, and the European Automobile Manufacturers’ Association, to include the U.K. in the EU Made in Europe trading strategy. The study says this would provide the partners with a “shared battery supply chain roadmap, backed by cooperation on critical materials, investment and innovation.” Notably, the report was commissioned by both ACEA and the SMMT.
Other recommendations made in the report includes mutual long-term investment frameworks for battery production and critical raw materials, better EV charging infrastructure, competitive energy costs and measures to support demand for EVs. It also calls for closer regulatory alignment where EU and U.K.
“This report shows why decisions taken on either side of the Channel affect firms, workers and suppliers on the other, and why a more coordinated approach is in both sides’ interests,” said Riccardo Crescenzi, professor of economic geography at LSE, in a statement. “The policy debate is moving quickly, often faster than the evidence available to inform it,” he added.
“The U.K. and EU are bound by 80 billion euros in annual automotive trade and millions of jobs,” said Mike Hawkes, the SMMT’s chief executive, in a statement. “At a time of intense global competition, this report makes clear the need for both sides to collaborate and remove barriers to trade.”
For the ACEA, Director General Sigrid de Vries said in a statement: “The close ties between the EU and UK automotive industries are a strength we cannot afford to undermine. Closer cooperation and pragmatic policy choices will be key to ensuring Europe excels as a competitive place to build and sell vehicles.”
