What’s driving automakers out of Europe? AMIE TSANG
Automakers, in quick succession, have moved in recent weeks to end parts of their operations in Europe. Nissan is the latest: On Tuesday, it confirmed that it would cease assembling Infiniti cars at its plant in northeast England.
The moves, during Britain’s wrenching debate over its departure from the European Union, known as Brexit, have raised the question: Is Brexit forcing the carmaking industry out of Britain?
It’s not quite so simple. Traditional car manufacturers, in Britain and in Europe over all, have been buffeted by forces around the world, and they assess where they want to make the next model of a car every few years or so. As automakers allocate resources, they have been balancing the need to respond to these changes with the justifications for producing cars in places like Britain.
Who is moving?
Honda said it would close its plant in Swindon, England, by 2021 and stop making one of its sedans in Turkey. The Swindon plant employs 3,500 and the Turkish plant about 1,100. Nissan reversed an earlier decision by deciding to produce the next generation of its X-Trail sport utility vehicle in Japan instead of Sunderland, England. Its luxury brand, Infiniti, is withdrawing from Western Europe altogether. Ford said in January that it would cut thousands of jobs across Europe.
Jaguar Land Rover announced in January that it would be cutting 4,500 people from its global work force; most of the cuts are expected to be in Britain. Dyson, which is developing an electric car, moved its headquarters from Britain to Singapore the same month. General Motors pulled out of Europe in 2017, selling the Opel and Vauxhall brands. In the wake of Volkswagen’s diesel-cheating scandal in 2015, when it used software to trick emissions tests, awareness of the harmful effects of fossil fuels has prompted stricter regulation throughout the Continent.
Some German cities are banning older diesel engines in an effort to reduce pollution in urban areas. London has initiated a levy on drivers of older diesel vehicles. Britain and France plan to phase out sales of new diesel and gasoline-powered cars by 2040.
In the meantime, more governments, drivers and carmakers are pivoting to electric vehicles. Cars running on alternative fuels made up 6 percent of new car registrations last year in Europe, up from 4.8 percent in 2017, according to JATO, an auto industry research firm.
As carmakers channel billions of dollars into grabbing a portion of the electric car market, many are looking to China, which is the world’s largest maker and seller of electric cars.
China wants one in every five cars sold to run on an alternative fuel by 2025, and officials have said the country will get rid of internal combustion engines in new cars altogether. The country’s rules also require carmakers to sell more alternative-energy cars if they want to continue selling regular models. This has prompted car companies to realign where they make and develop cars.
In their efforts to grab a share of the growing market for electric cars, traditional car companies are competing not just with each other but also against technology companies. Uber, Alphabet and Tesla are channeling money into electric cars and autonomous cars, while reshaping the way people travel with ride-hailing services. This has prompted rivals to team up, or to work with the technology companies, so that they are not left behind.