The U.K. and the European Union will "soon" announce a solution on post-Brexit trading rules that automakers warn could lead to factory closures, Business and Trade Secretary Kemi Badenoch said.
"This is not a U.K. problem, it is an EU-U.K. problem. It works both ways," Badenoch told Bloomberg on Tuesday on the sidelines of the Qatar Economic Forum in Doha. "We should see an answer soon."
Stellantis this month warned that British car plants would close with the loss of thousands of jobs if the issue was not addressed.
Ford is investing 380 million pounds ($480 million) to build e-motor capacity at an engine plant in Halewood near Liverpool, England, part of electrification plans across Europe.
The EU's rules of origin, which are due to start next year, stipulate that 45 percent of an electric vehicle's value must be sourced in the U.K. or elsewhere in Europe from 2024 to avoid export tariffs of 10 percent. The tariffs would be a burden for automakers building cars in the U.K. and exporting them to the EU.
Stellantis, which is retooling its Ellesmere Port site to build Opel/Vauxhall Combo, Peugeot Partner and Citroen Berlingo electric vans, said the rising cost of raw materials and a lack of U.K. battery supplies make it difficult to comply with the rules while remaining profitable.
The Brexit trade deal is up for review in 2025 and both sides are "looking to see what we can do in advance of that," Badenoch said.
She suggested that aspects of the agreement need to change in light of global developments including Russia's war in Ukraine. "Quite a lot of the things we have put in place just don't work given all the things that are happening," she said. "We have to be as nimble as possible."
Post-Brexit rules are part of a growing list of challenges facing the auto industry in the U.K., where vehicle output shrank almost 10 percent last year. The country has been struggling to attract significant investment, while several manufacturers have shifted output to other countries.
Andy Palmer: 'Lack of action'
British carmakers are hurting from a "lack of action" by the government, but can rebuild competitiveness by relying less on trade with Europe and look instead to countries including the U.S. and China, said Andy Palmer, Nissan's former chief operating officer and ex-Aston Martin CEO.
Brexit gives the British car industry the “opportunity to catch up," Palmer told a U.K. Parliament committee on Tuesday.
At the Qatar Economic Forum, Badenoch confirmed the government is working on a so-called advanced manufacturing plan aimed at keeping carmakers in the U.K.
The strategy "should be a way of helping to corral a little bit more — in terms of not just support but more streamlined policies — about what we are going to do in order to make sure this industry survives," she said.
She also said she is hopeful Tata Group, the parent company of Jaguar Land Rover, will choose the U.K. over Spain for its battery plant. "We are doing everything we can to show that the UK is the best place to invest," she said.
BMW last year said it will move production of electric Mini hatchbacks from Oxford, England, to China. Honda closed its car factory in Swindon in 2021, leaving Britain with just four major manufacturers: Jaguar Land Rover, Nissan, BMW and Toyota.