A car manufacturer has told the UK Government it risks losing industrial capacity unless it tears up some of its Brexit trade rules.

Stellantis, which manufactures models for Vauxhall, Peugeot, Citroen and Fiat says its plans to build electric vehicles are in jeopardy because it is no longer able to meet new requirements on where parts are sourced.

The world’s fourth biggest car maker, with plants in Ellesmere Port and Luton, has called on the government to come to an agreement with the EU to keep rules as they are until 2027.

In a submission to a Commons inquiry into electric car production, the company said its UK investments were based on meeting the strict terms of the post-Brexit free trade deal.

These state that from next year, 45% of the value of the electric car should originate in the UK or EU to qualify for trade without tariffs.

Stellantis said it was “now unable to meet these rules of origin” after the surge in raw materials costs during the pandemic and energy crisis.

If the government cannot get an agreement to keep the current rules until 2027, from next year “trade between the UK and EU would be subject to 10% tariffs,” it said.

The company said this would make domestic production and exports uncompetitive in comparison to Japan and South Korea.

“To reinforce the sustainability of our manufacturing plants in the UK, the UK must consider its trading arrangements with Europe.”

A UK government spokesman said Business and Trade Secretary Kemi Badenoch is determined to ensure the UK remains one of the best locations in the world for vehicle building and has raised Stelllantis’s concerns with the EU”.