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Brexit throws down electric gauntlet to UK cars

05 Jan,2021
<p style="text-align: center;"><img title="1609818863223894.jpg" alt="8.jpg" src="/ueditor/php/upload/image/20210105/1609818863223894.jpg"/></p><p>A cold start occurs when frosty weather makes car oil too viscous to circulate properly. The UK government faces similar difficulties revving up its motor industry after&nbsp;Brexit. Though it swerved tariffs through a last-gasp trade deal with the&nbsp;European Union, looming export rules on&nbsp;electric vehicles&nbsp;could leave local automakers stuck in second gear.<br/><br/>The agreement struck on Christmas Eve elicited a sigh of relief for UK-based car manufacturers, which collectively account for 13% of Britain&#39;s goods exports. Tariffs would have bunged up automotive supply chains and hobbled the industry, which exports just over half its output to the EU.</p><p><br/></p><p>Yet British manufacturers are now subject to so-called rules of origin, which govern how much of a product&#39;s value can originate outside the UK or EU and still qualify for tariff-free treatment. The trade deal pegs that proportion at 45% for combustion engine&nbsp;cars, ensuring plants operated by the likes of BMW and Jaguar Land Rover enjoy tariff-free access.<br/><br/>Battery-powered vehicles can initially have 60% of their value from other countries. However, the reprieve is only temporary, falling to 55% by 2024. That&#39;s a problem because batteries alone, sourced mostly from Asia, currently make up to half of a zero-emission ride&#39;s value. Combined with other foreign components, UK-made electric vehicles exported to the EU could face a 10% surcharge under World Trade Organization rules.<br/><br/>True,&nbsp;EVs&nbsp;accounted for a tiny proportion of the UK&#39;s 1.3 million vehicles produced in 2019. But automakers&#39; future is increasingly electric: sales of petrol-powered cars contracted by about two-fifths in the first nine months of 2020, according to the European Automobile Manufacturers&#39; Association, while electric and hybrid vehicles doubled year-on-year.<br/><br/>Persuading companies like Nissan Motor to stay in Britain won&#39;t be easy for Prime Minister Boris Johnson. One option is to make more batteries in the UK, though this would require a substantial increase in production. The UK&#39;s Society of Motor Manufacturers and Traders reckons the UK&#39;s current EV battery capacity is just 2 gigawatt hours a year - compared to a longer-term goal of 120 GWh needed to power two million EVs.<br/><br/>True, automakers could source batteries from the EU instead. And the latter&#39;s value should drop as the industry scales up. Even so, UK-made cars face more unwelcome bumps in the road.</p><p><br/></p>
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