UK should count as one of the EU 27

Two of Europe's biggest carmakers want Britain treated as though it were inside the bloc when the EU writes its new industrial protection rules. Emanuele Cappellano, who leads Stellantis's European brands including Fiat, Citroën, Opel and Vauxhall, and François Provost, chief executive of France's Renault, both backed UK inclusion in the proposed 'Made in Europe' legislation.

He pointed to Stellantis's own footprint, including its Ellesmere Port facility in Merseyside, which produces small vans.

What the Made in Europe rules would do

The proposed rules are intended to ensure that EU subsidies and government procurement benefit European industry rather than manufacturers from other countries, and form part of the EU's response to China's rise in manufacturing industries such as carmaking and chemicals.

Under the proposed Industrial Accelerator Act:

• •Cars will have to be "made in Europe", and contain enough European parts and materials, to continue to qualify for EV grants and EU public procurement.
• •If Brussels defines 'European' strictly as EU countries only, Britain risks being left out, prompting intense lobbying from the UK car industry and government to be included.
• •Europe's main automotive lobby groups ACEA and Clepa have also put their weight behind the UK.

France's industry minister, among others, had argued that the UK should be left out given Brexit.

Pressure on Britain over Chinese imports

Alongside backing UK inclusion, the two executives urged the British government to weigh limits on cars imported from China. Provost said there was "no other choice" but a deal between the UK and EU, but that the UK would also have to stop allowing Chinese cars in without limits. He also flagged that there is "some open question about the level of imports" if the UK joins the IAA ecosystem.

On Chinese competitors, Provost said an industry joining the ecosystem should not be closed to them, but that operating in Europe requires deep investment in the whole value chain, from final manufacturing and suppliers to R&D and technologies.

Cappellano agreed the UK should weigh tariffs, arguing it is very difficult to defend an industrial footprint while keeping the market completely open. "Either one or the other," he said.

London has so far rejected imposing its own tariffs on Chinese imports, but UK business secretary Jonathan Reynolds said this month that decision was under review.

Chinese competition and EU quotas

Both executives made their remarks at the Paris motor show, an event the French president, Emmanuel Macron, visited on Monday. Chinese brands were out in force at the show, among them Li Auto, GAC and Chery, all exhibiting in Paris as they push expansion plans across Europe.

The backdrop for Europe's car industry is demanding:

• •Manufacturers are investing tens of billions of euros in shifting production to electric vehicles, while demand remains lower than before the coronavirus pandemic.
• •Chinese carmakers' market share has soared as the transition to EVs opens the door to new entrants.

On Monday the EU confirmed a limit of 350,000 hybrid electric vehicle imports from China per year, taking force in December, under a landmark four-year agreement made in Beijing last week. The EU expects the quota to halve China's market share, which now stands at 6%.

Cappellano also expressed scepticism over including non-EU countries such as Japan, Turkey and Morocco in the rules, pointing to proposals that carmakers be allowed to source 30% of their materials from outside the EU. He argued for more time until 2030 for manufacturers to source batteries from within Europe, since China dominates global battery supply and building up the European industry would take longer.

The EU quota on Chinese hybrid imports takes force in December, while the UK's decision on its own tariffs remains under review.