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How Brexit Could Influence the UK Vehicle Market: Part 2

Raquel Soat
Apr 02, 2019

EVs

The first part of this blog series discussed how a no-deal Brexit could affect the UK automotive market, Part 2 addresses how Brexit could affect the nation’s automotive production capacity. In 2018, the top vehicle producers in the UK included Nissan, Jaguar Land Rover, Honda, and MINI. Of these OEMs, Nissan, Jaguar Land Rover, and Honda have hinted at leaving the UK if a no-deal Brexit occurs. Nissan has already announced that its new X-Trail model will be built in Japan, which is a reversal from previous plans to build the vehicle in the UK.    

Brexit’s Impact on PEVs

Between 2013 and 2018, Nissan produced nearly 155,000 Leafs in its UK facility, over 69,000 of which were produced in 2018. The Leaf is the top-selling EV in the UK for the same 6-year timeframe with nearly 27,000 sales, and it is consistently near the top of bestselling models annually. If Nissan were to move its production facilities out of the UK because of a no-deal Brexit, it is likely that the number of Nissan Leafs sold in the country would decline due to increased costs from heightened import tariffs. 

The UK had a 22% increase in sales between 2017 and 2018; it is likely that this growth will slow for all models if a no-deal Brexit occurs. The following shows where some of the UK’s top-selling PEVs are produced:

  • Nissan Leaf: UK, US, Japan
  • Renault ZOE: France
  • Volkswagen Golf: Germany
  • BMW i3: Germany

Notably, many of the UK’s top-selling plug-in EVs (PEVs) are produced in the European Union (EU), meaning there are currently lower import tariffs on these vehicles going into the UK than there would be in a no-deal Brexit scenario. With World Trade Organization trade terms, imported vehicles would become up to 10% more expensive entering the UK. This shift presents a potential opportunity for manufacturers already in the UK to capture more of the UK PEV market, but also would make them less competitive in the overall EU market. EV manufacturers would need to analyze the tradeoff between moving their facilities out of the UK or ramping up production to meet potential new demand.  

More broadly, selling vehicles from Europe in world markets will likely become more expensive in a no-deal Brexit scenario. This may create opportunities for other manufacturing powerhouses—like Japan, South Korea, and North America—to expand their market share as European vehicles become less cost-competitive. 

Steps to Mitigate a Decrease in PEV Sales

The situation in the UK changes daily and likely will continue to until the new April 12 withdrawal deadline. Under a no-deal Brexit scenario, the UK automotive sector is bound to see an economic shift, the extent of which is unknown. Some production facilities may be better off weathering the no-deal storm to take advantage of other vehicles becoming more expensive. If, for example, Nissan continues manufacturing its Leafs in the UK, it could take market share from EVs like the Renault ZOE and BMW i3 that are imported to the UK and will become more expensive in the near-term. If automakers do decide to pull their facilities from the UK, the country could adjust in the aftermath with significant incentives for EV purchases. This tactic has worked for Norway, which currently has no domestic PEV manufacturing capacity, but has the highest PEV adoption rate thanks to its incentive structure

Brexit has created uncertainty in the market, but with careful planning and analysis, automotive companies can lessen the negative effects of a no-deal Brexit and continue to increase EV market share.