Stellantis warned that British car factories will be forced to close with the loss of thousands of jobs if the U.K. government does not renegotiate its Brexit deal immediately.
The owner of the Vauxhall, Opel, Peugeot, Citroen and Fiat brands told the British parliament that under the current deal with the EU it would face tariffs when exporting electric vans to Europe from next year when tougher post-Brexit rules come into force.
Stellantis urged the government to reach an agreement with the EU about extending the current rules on the sourcing of parts until 2027 instead of the planned 2024 change.
"If the cost of EV manufacturing in the U.K. becomes uncompetitive and unsustainable, operations will close," Stellantis said in a submission to a House of Commons committee examining the prospects for Britain's electric vehicle industry.
"Manufacturers will not continue to invest and (instead will) relocate manufacturing operations outside of U.K., as seen with previously established U.K. manufacturers such as Ford and Mini," Stellantis said.
Stellantis has two UK plants -- one in Luton, which builds large vans and another in Ellesmere Port, a former former Astra production plant that will become a production hub for electric versions of the Opel/Vauxhall Combo, Peugeot Partner and Citroen Berlingo vans. Deliveries of these vans are due start this year.
When Stellantis announced a 100 million pound ($126 million) investment for Ellesmere Port in 2021, the automaker said it believed it would be able to create enough parts in Britain or Europe to meet the parts sourcing rules.
"We are now unable to meet these Rules of Origin," it said in its submission to parliament, citing external factors such as the war in Ukraine, supply issues and raw material cost inflation.
Under the trade deal agreed when Britain left the EU, 45 percent of the value of an electric vehicle must come from Britain or the EU from 2024 to avoid tariffs.
The British car trade group, the Society of Motor Manufacturers and Traders, said in its submission to the parliament that the current manufacturing capability in the EU and Britain would not allow the sector to meet the requirements for batteries and battery parts.
The warnings echo wider fears within the industry that the British car sector does not have the capacity or the supply chain to switch to EVs, a huge risk at a time when automakers globally are selecting sites to build new battery gigafactories.
Britain has drawn electric vehicle investment from Nissan and Ford, while other big players are still weighing up where to invest.
A British government spokesperson said it had raised the issue with the EU.
Nick Gibbs contributed to this report