Stellantis isn’t necessarily a household name, but their brands are: The owner of Jeep, Alfa Romeo, Vauxhall, Fiat and others is one of the world’s largest automobile manufacturers
Stellantis isn’t necessarily a household name, but their brands are: The owner of Jeep, Alfa Romeo, Vauxhall, Fiat and others is one of the world’s largest automobile manufacturers and is warning that it risks having to close a UK factory unless the government re-thinks its changes to “Rules of Origin” legislation. The company is concerned that batteries and battery parts aren’t going to meet the criteria for rules of origin duty exemptions when the law changes at the end of this year. Under that rule change any vehicle exported to Europe from the UK would face a 10% tariff unless at least 45% of the vehicle’s value originates from the UK or EU. Because of the shortage of battery manufacturing in the region, which has been slowed further by the war in Ukraine, there is a high likelihood that the majority of vehicles coming off the production line at Stellantis’ Ellesmere Port factory would fall foul of the rule and make the export of the vehicle uncompetitive. This has been further hampered by more toing and froing on the Britishvolt gigafactory, which one day might be bult in Northumberland. The latest speedbump is over the terms of the acquisition of the land for the site, which is likely to push back the breaking of ground at the site.
Meanwhile France has secured a €5.2bn investment from a Taiwanese battery manufacturer, ProLogium, who are to build a massive operation in Dunkirk. CEO of ProLogium Vincent Yang has said that France holds appeal because of its abundance of low carbon nuclear energy, and also that state subsidies for the project are mostly paid up front, rather than when production gets underway. The appeal of Europe as an operational base is because “there is a growing market demand for electric vehicles… the regulation is neutral in the sense that it is supranational and will not be affected by national elections”. This will be seen as a win for Europe who are competing with the US, which is an incredibly attractive spot for green energy investments thanks to Joe Biden’s inflation Reduction Act, which is throwing money at businesses in the renewables space and has successfully tempted several European businesses to relocate manufacturing or expansion across the Pond. Northern France now has four major battery plants under development.
Yesterday, markets weighed on Eurozone GDP coming in line with expectations as employment and exports helped boost the areas trade surplus. The release indicated that the size of the eurozone economy grew 0.1% over Q1 on a quarter-on-quarter basis as employment grew 0.6% over the same period. Growth in exports of machinery, vehicles and chemicals assisted overall growth, while energy imports shrunk. As we looked at earlier in the week, on Monday the European Commission upwardly revised their growth forecasts for the EU over the course of 2023. Brussels is now expecting the 27-state bloc to register 1% growth this year, marking an increase of 0.2 percentage points for earlier predictions. With recessionary fears easing and energy insecurity concerns subsiding, they also raised 2024’s estimate 0.1 percentage points to 1.7%.
US Retail Sales Come in Softer-than-Expected
Yesterday saw US retail sales come in considerably softer-than-expected with investors weighing on the impact that a slowdown in consumer spending may have on growth, inflation, and the Fed’s interest rate course. Against forecasts of a 0.8% print, retail sales grew just 0.4% between the month of March and April. While this was below expectation, this marked the first positive print January with sales at health and personal care as well as building materials and garden supplies shops adding to the increase. This came as sales at sporting goods, hobby, musical and books shops slummed 3.3%, suggesting that discretionary spending is tightening up as pockets get squeezed.
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