Asked by
To ask His Majesty’s Government how they will ensure that
electric cars built in the United Kingdom after 2024 meet the
country-of-origin requirements, such that they can continue to be
exported to the European Union tariff-free.
The Minister of State, Department for Business and Trade ( of Lainston) (Con)
The modern rules of origin we negotiated with the EU underpin our
unprecedented zero-tariff, zero-quota trade agreement. These
rules were developed with industry to reflect the needs of UK
electric vehicle manufacturing. We are aware of the supply chain
challenges, also caused by external factors, including Russia’s
war in Ukraine. This is why our officials are in constant
dialogue with the sector to support it to access the maximum
benefits of this agreement and other assistance.
(LD)
My Lords, I thank the Minister for his Answer. He did not say
what his department is doing about the clause in the trade and
co-operation agreement that kicks in at the end of this year—in
2024—where, if there is not 40% of local content in
UK-manufactured electric vehicles, they will be subject to up to
22% tariffs when exporting to the EU, and that will have a
knock-on effect on other free trade agreements. Will the Minister
undertake specifically to go back to the European Union to look
at that clause, because we will not be able to export electric
vehicles from this country economically unless it is put on hold
at the end of this year.
of Lainston (Con)
I am very grateful to the noble Lord for raising this point, and
I hope I answered his Question to some extent. It is very
important that we invest in future vehicle manufacture in this
country. In the papers I brought with me to this great House are
lists of the enormous number of subsidies, grants, credits and
other mechanisms of support to ensure that we can build here the
electric vehicles and the batteries we need, homegrown in the
United Kingdom, to ensure that we have almost 100% of content of
these vehicles when we sell them—not just to the European Union
but all around the world. It is important to mention the
automotive transformation fund and how it has helped Stellantis
and Nissan, both of which are successfully working on producing
batteries following, crucially, a critical mineral supply deal
with Indonesia which I personally signed one month ago. There is
work to do, let us be under no illusion, but the Government are
committed to it. Huge amounts of money and a great deal of
resource, including the attention of His Majesty’s Government,
have been committed to it.
(Lab)
My Lords, I declare an interest as a former member of the
Government’s Automotive Council UK, looking at investment in this
important industry of ours. The Americans have set aside £102
billion to encourage inward investment in new technologies,
including electrification of the whole of their car and
automotive industry. There is no doubt, looking at what we are
putting aside here, that we are barely in the game. There is £850
million set aside to entice and encourage people here, which
sounds a lot of money, but it is not, compared to what other
people are doing. Jaguar Land Rover has asked the Government for
half a billion pounds for a mega battery factory in Somerset, as
opposed to Spain. It is crucial for the long-term interest of our
industry that we do not let this investment disappear from our
shores, otherwise, my dear friends, there will be no industry in
this country in 10 years’ time.
of Lainston (Con)
I greatly thank the noble Lord for his intervention and for the
important promotion of this industry. I say to anyone who is
thinking of locating their business in Spain that Ferrovial
announced yesterday that it is leaving Spain because it is one of
the least hospitable environments in Europe to do business,
whereas we know that Britain remains the top destination for
doing business in Europe and the second most important
destination for foreign direct investment in the world. It is
important to remember and celebrate that last year we raised more
money for technology and start-ups, which is precisely what we
are talking about with the battery and EV industry, than France
and Germany combined, more than China, and more than India. It is
a testament to this Government’s efforts to ensure that we have
the subsidies and support, including government support, to
enable our citizenry—some of the best educated in the world—to
take advantage of this. I take the point made by the noble Lord
very seriously. We are doing a huge amount: the facts bear it
out, the money is coming here and so is the industry.
(CB)
My Lords, would the Minister perhaps be so kind as to answer the
question that the noble Lord, , asked about the use of the
machinery of the trade and co-operation agreement to take up with
the European Union any difficulties that might arise through a
change in circumstances described, because it is really
important? With the presumably better climate that now exists for
our dealings with the European Union, surely this is the time to
raise the matter in the appropriate top-level committee of the
TCA.
of Lainston (Con)
We work with all our partners to ensure that trade with the
European Union is as seamless and friction-free as possible, and
I know that we all congratulate the Prime Minister on the
resolution of the situation in Northern Ireland. I believe
personally and passionately from my conversations over the last
few days alone—including at a breakfast I attended with the
Spanish Business Council—that this will allow a substantial
number of the market access barriers, the other areas of
friction, to be removed. This was demonstrated when we saw the
reintroduction of discussions on the Horizon programme almost
immediately following the announcement of the Windsor Framework,
so I am very confident that a practical solution can be reached,
but these are short-term measures. The reality is that we need to
build our own capacity in this country, invest in it and support
it, and that is exactly what we are doing.
Lord Swire (Con)
My Lords, is not the truth of the matter that unless we rapidly
increase the back-up with electric vehicle charging in this
country, there will be no electric cars going to the EU, or
anywhere else for that matter, from this country? What confidence
can my noble friend give to those who are considering switching
to electric vehicles or already have them, because the
infrastructure is lagging behind the demand, and if the
Government seek to achieve their targets, they need to invest
more within this country?
of Lainston (Con)
My noble friend is clearly hoping to upgrade his car from his 23
year-old Range Rover. We are very aware of the need, as we are as
individuals in this House, to ensure that the infrastructure is
there. It takes time, it is very costly, there has been
government investment, but he is absolutely right that further
focus is required, and I am very happy to write to him on the
specifics, because it is important that everything fits
together.
(Lab)
My Lords, it is all well and good the Minister telling us all
this, but a new report from the Energy & Climate Intelligence
Unit warns that UK motorists could miss out on £9 billion-worth
of savings on electric vehicles due to the shrunken second-hand
car market, which could be as many as 2.1 million vehicles
smaller by 2033, if the Government continue to fail to boost EV
take-up. This will be bad for drivers, bad for the country and
bad for the environment, with low-income drivers forced to
continue running petrol cars. What positive steps will the
Government now take to buck this trend and ensure a viable
second-hand car market for EV vehicles?
of Lainston (Con)
It strikes me that, if you want to have a second-hand car market
in EVs in this country, you need to build more new EVs in the
first place. That is why we are investing heavily in making sure
both that we have the facilities and capacity to procure critical
minerals to enable us to make batteries, which are the core
component in such cars, and that we have the partners in this
country to develop the battery technology. We are not simply
looking at manufacturing; we are also investing heavily in the
R&D around battery design. Our real strength and core defence
against the future are our brains. The investment that we have
made in concepts, such as our investment of more than £500
million in the Faraday Institution in Coventry, is a good
representation of the work that we are trying to do. This does
not happen overnight. It is truly a national endeavour. I hope
that the noble Lord is reassured that the Government’s focus is
on this incredibly important and topical subject.
(LD)
My Lords, there was news this week that the failed Britishvolt
company has been bought by a newly established company based
abroad and that the site will not be used as intended to create a
much-needed gigafactory to supply manufacturers of electric
vehicles. Can the Minister clarify how the new plans fit into the
Government’s priorities for the industry? What funding has
already been given to this project? Are there plans to give it
any further funding?
of Lainston (Con)
This is an ongoing commercial issue so it would not be
appropriate for me to comment on some of the specific points that
the noble Baroness makes. However, we did support Britishvolt
originally—I am happy to write to her with the specific
numbers—as we have supported all battery endeavours in this
country. It is the right thing to do. These are new technologies
and companies. They are being created by entrepreneurs taking
significant risk; we should celebrate that. It is not a straight
line, however. We must be prepared for disruption in this market;
there will be volatility. The important thing is that the
Government stand behind this industry. We want a car industry in
this country that builds high-quality electric vehicles with
batteries made here, to sell to the rest of the world and take
advantage of our post-Brexit vision for Britain.
