The goals behind Brexit–the successful referendum to remove Britain from the consortium of governments known as the European Union–were always a little intentionally vague, but the main idea was that the United Kingdom wasn’t going to let anyone else tell them what to do. This can be summed up in the Leave campaign’s slogan “Take back control.” It’s been clear for a while that almost exactly the opposite has happened, and perhaps nowhere is that clearer than in the car industry.
That the entire Brexit experiment was actually a political Grenfell Tower in the making–a terrible and avoidable self-immolation confounded by a confused government that would inevitably destroy the lives of the people with the biggest stake and least control–seemed obvious at the time to many, many people. Just not enough people.
I don’t want to dunk on the people who voted “leave” in the referendum because it’s not my country. It wasn’t my choice. If anything, America will benefit from the outflow of production and dollars from the UK. It sucks. But it’s also a good reminder that politics has consequences. It impacts the cars you love and the cars you get. It impacts the people who make the cars. It impacts everyone.
Car Companies Beg The EU To Not Make The UK Suffer The Consequences Of Their Own Actions
If you don’t want to read this article, this tweet does a pretty good job of summing up what’s happening now with the UK’s car industry. For the car industry, at least, Brexit has been an own-goal of epic proportions. Own-goal probably understates it. Rather than accidentally kicking the ball into their own net, it’s like they punched the goalie in the throat, headered the ball into the back of the goal, and then attempted to give one of the linesmen a noogie.
Being a part of the European Union allowed for easy trade between the various countries in Europe and the other regions aligned with the European Union via treaties. With a kind of misguided optimism that rivals Underpants Gnomes (see above video), Britain was going to come out of Brexit with the ability to negotiate even better and even stronger trade agreements.
Charitably, that hasn’t happened yet, and the United Kingdom relies heavily on the rest of Europe for trade. A Europe that, for good reason, saw Brexit as a kind of big middle finger, and negotiated a tough trade deal on the way out — one that contains all sorts of ticking time bombs.
One of those bombs is about to explode. The European auto industry is shifting rapidly towards electrification and rules set to go into effect next year will require 45% of the value of an EV sold in the European Union to come from either Britain or the EU. That’s fine for gasoline cars, but as David learned with his i3, the value of an EV is largely its battery and the Brits ain’t exactly rolling in lithium and battery factories.
Ford is begging the EU for an extension. Stellantis did the same, saying it would have to start closing plants and laying people off if the rules go into effect. Here’s a bit from from the BBC via Reuters that goes far to explain how bad this can get:
Andy Palmer, former Nissan chief operating officer, told BBC radio that urgent action was required.
“The cost of failure is very clear. It’s 800,000 jobs in the UK, which is basically those jobs associated with the car industry,” said Palmer, who is also chairman of European battery manufacturer InoBat.
“If you don’t have a battery capability in the UK, then those car manufacturers will move to mainland Europe.”
The Germans To The Rescue
While you were sleeping, the Verband der Automobilindustrie (VDA), aka the German Association of the Automotive Industry, decided it, too, didn’t want to see Britain sink into the ocean.
The VDA, the German car industry lobby group, said “it is now urgent to adjust” the deal because tariffs would represent “a significant competitive disadvantage for the European car industry in relation to its Asian competitors in the so important UK market”. Tariffs would slow down the shift to electric cars, it argued.
The VDA’s members include some of the world’s most powerful carmakers such as BMW, Mercedes-Benz, Porsche and Volkswagen. The UK represents an important and profitable market for Germany’s carmakers – albeit a small part of their global sales.
There are probably a few reasons behind this that are not purely selfless on the part of the VDA. As mentioned, the UK is still a decent-sized market for German automakers and an even worse economic condition in the country isn’t good for business. Second, the rush to make cars electric hasn’t been easy for German automakers, either, and it behooves the VDA to get Brussels to keep pushing back these requirements (though they asked for an extension to 2026 instead of 2027).
And, finally, the Germans may be mad at the Brits, but there’s a war not that far away from Germany’s border and we all need friends.While the Russians can barely build Ladas, it’s much better to keep the British strong than it is to let the Chinese take over everything.
China’s Geely Continues To Take Over British Automakers
Geely has been slowly and consistently buying up European and, in particular, British automakers. In addition to Volvo, Geely owns the Lotus Group and part of Aston Martin. As of this week, Geely now owns a lot more of Aston.
There’s a full writeup in the Financial Times about the deal, but here’s the meat of it:
Geely has doubled its stake in Aston Martin to 17 per cent and will supply technology and components to the luxury-car maker under a new “long-term partnership”, growing the Chinese group’s influence over a company that it has long desired to own.
The Chinese carmaker spent £234mn increasing its holding, becoming the third-largest shareholder after the consortium of investors led by Aston Martin chair Lawrence Stroll, and Saudi Arabia’s Public Investment Fund, and placing it ahead of Mercedes-Benz.
Geely bought 42mn shares from Stroll’s consortium, and was issued with 28mn new shares at 335p each, a substantial premium over Wednesday’s closing share price of 231p. The deal raises £95mn for Aston Martin.
It’s worth pointing out that Geely also probably owns a little more of Aston Martin because Geely also owns a good chunk of Mercedes Benz. The company had successfully tried to take over all of Aston, but lost out to Stroll.
Again, if the idea of Brexit was to make Britain more British, selling one of your best brands to a mix of Canadian, Saudi, and Chinese companies is a curious way of going about it. To be fair, many of Britain’s car companies were already sold off before Brexit, but it’s getting worse not better since.
While there’s a burgeoning Cold War Part Two brewing with China, I don’t necessarily see it as an awful outcome that the Chinese are investing in Western Automakers. I still have the probably naive belief that automobiles, which are an intersection of commerce and art and sport, are a superior way of uniting people than pure consumption alone (those McDonalds in Russia didn’t seem to stop the missiles).
Chrysler Airflow: Dead
Stellantis attempted to get people to care about Chrysler with a vision it called the “Aiflow” the company showed at CES in 2020. The name came from a 1930s Chrysler and it was, uh, ok. It was big and kind of round and sort of looked like a squished Pacifica. But it was something!
According to MotorTrend, both the name and the design are dead.
The change comes at the direction of Chrysler Brand CEO Chris Feuell who came into the job with a new eye and rulebook she wants to play by. “Chris came at it with her perspective which we really enjoyed,” Gilles says. “She wanted a statement that had literally zero to do with anything that you have seen today, even the Airflow concept car. It is evolving in a new direction.”
“Airflow was a great exercise to signal again the type of vehicle Chrysler might want to do,” Gilles says. As a compelling crossover it was a great starting point. But under Feuell’s new direction, the team aimed to beat their own design.
Ralph Gilles rules so, yeah, pitter patter my friends. Make something as fun as the Dodge Charger Daytona SRT EV please.
The Big Question
Ok folks, is Britain just temporarily boned or is this is a full-on, generational boning?
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