One of the world's largest carmakers has urged the Government to make changes to the Brexit deal to secure its UK factories and jobs.

Stellantis – which owns brands including Peugeot, Citroen, Fiat and Vauxhall – committed to building electric vehicles in the UK two years ago, but has now said it cannot meet Brexit rules due to hikes in raw material costs.

Brexit rules require that 45% of an electric car’s value should originate in the UK or EU to qualify for trade without tariffs.

It means electric vehicles built at the firm's Ellesmere Port plant will be slapped with tariffs of 10% when exported to mainland Europe in 2024, due to not being constructed with enough local parts. It could put the plant and jobs at risk, the carmaker said. 

In a submission to a Commons inquiry, Stellantis said the Brexit deal was a “threat to our export business and the sustainability of our UK manufacturing operations”.

It urged the Government to make an agreement with the EU to keep existing rules until 2027, saying: "To reinforce the sustainability of our manufacturing plants in the UK, the UK must consider its trading arrangements with Europe." It also said there will be "insufficient battery production" in the UK and Europe to meet deadlines of phasing out production of petrol and diesel vehicles by 2030. 

Stellantis has more than 5,000 employees on its books in the UK, and operates factories at Ellesmere Port and Luton. Last year its Ellesmere Port plant began the switch from making petrol and diesel Vauxhall Astras to electric vans.

Vauxhall's plants in Ellesmere Port and Luton are at risk of becoming uncompetitive

Andy Palmer, former COO of Nissan and CEO of Aston Martin also called for the government to invest in local battery production. He said: “The rules of origin requirements post Brexit have been abundantly clear for four years. The U.K. has had time to preserve and recreate its automotive supply chain for an electric era. Of greatest concern is the lack of battery factory investment given the aggressive priority given to this capability by USA and EU. Without this capacity, car manufacturing in the U.K. will move to mainland Europe putting at risk 800k jobs. Government intervention, competitive with that of USA and EU, is mandatory to counter this decline

Founder and CEO of Electrifying.com Ginny Buckley said: “The threat from Stellantis is clear; if the Brexit deal isn’t renegotiated or local battery production secured - and soon - they will be forced to relocate outside of the UK, and I suspect others may follow.

“This is bad news for our car industry that’s already faltering; with Nissan now the only mainstream company committed to manufacturing electric cars here in the UK, the threat to jobs across the sector is serious. Not only this, as a way of clawing back revenues, any extra production costs will be passed on to the consumer. This is not a price many motorists can pay in the current climate as affordability is still a huge issue for car buyers with just five electric cars currently on sale in the UK under £30,000.

“Our car industry is worth £14 billion of added value to the UK economy and if it’s to stay competitive on the global stage as it electrifies, it’s vital that we’re seen as an attractive place for manufacturers to invest.”

Nissan is now the only UK car maker committed to making EVs in the UK