Brexit uncertainty weighs on Jaguar's electric car investment decision

PARIS (Reuters) - Britain's biggest carmaker Jaguar Land Rover TAMO.NS has yet to make an imminent decision on whether to build electric cars in its home market partly due to uncertainty over the final Brexit terms, its boss told Reuters on Tuesday.

The automaker, which builds nearly a third of Britain’s roughly 1.67 millions cars, is also talking to warehousing companies and has plans to stockpile parts in the event unfettered trade with the bloc is lost.

The firm could also move its annual summer-time shutdowns to the spring to handle any disruption from a disorderly Brexit after Britain leaves the bloc at the end of March 2019 although no decision has been taken.

Carmakers are triggering contingency plans to protect the just-in-time mechanisms which see tens of thousands of cars, parts and engines move between Britain and the continent every day.

Jaguar Land Rover (JLR) is building its first electric car, the I-PACE, in Austria. Asked whether the firm had settled on whether to build electric cars in Britain, Chief Executive Ralf Speth told Reuters:

“We haven’t made the decision because we don’t know at the end of the day the final conditions and we also see uncertainty resulting out of the Brexit discussions so we don’t know where we can do the investment best.”

“At the very last moment, you can decide about the location so there is a certain flexibility but we have used a lot of this kind of time already so the discussions about this kind of technologies and future locations are imminent.”

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The automaker has also cited the need for support from government and academia to make sure the right infrastructure is in place in Britain.

London and Brussels are racing to reach a Brexit agreement by the end of the year but Prime Minister Theresa May’s proposals face opposition from both the EU and many of her own lawmakers, who want a cleaner break from the bloc.

Speth warned that some suppliers were hesitating to invest in Britain and that it would be “impossible” for carmakers to meet rules of origin rules, often set at around 55 percent in international trade deals, without the continuing inclusion of EU components.

Speth warned that although the firm was looking at holding more components, it would not be a simple process.

“(It’s) not just stockpiling and the warehouse or the piece of land,” he said.

“You also need additional pallets, electronics, the racks, the materials, the handling devices. It’s not just I go home one day, and there is a drawer somewhere and I open it and then I close it again.”

Reporting by Costas Pitas, editing by Guy Faulconbridge