Brexit is holding back innovation at European carmakers

Brexit is holding back innovation at Europe's carmakers by diverting attention from the big technological ch...

Posted: Nov 9, 2018 4:27 PM
Updated: Nov 9, 2018 4:27 PM

Brexit is holding back innovation at Europe's carmakers by diverting attention from the big technological challenges facing the industry.

Senior tech executives at BMW and Volkswagen say the United Kingdom's departure from the European Union could cause the region to fall behind Asia and America because it is disrupting operations, threatening collaboration in research, and draining resources.

Brexit

Business, economy and trade

Company activities and management

Continents and regions

Europe

European Union

Government organizations - Intl

Northern Europe

Product development

Product innovation

Product management

United Kingdom

Automakers and manufacturing

Automotive industry

Business and industry sectors

Companies

Volkswagen AG

BMW

"The Brexit debate is capturing the entire Europe, which is not going to accelerate technological growth," Martin Hofmann, Volkswagen's (VLKAF) chief information officer, told CNN Business at the Web Summit in Lisbon, Portugal. "It's distracting us."

Europe's car industry pours €54 billion ($61.3 billion) into innovation every year, according to the European Automobile Manufacturers' Association. That makes it the leading investor in research and development in Europe.

But that spending is under threat. The Society of Motor Manufacturers and Traders said investment into new models and facilities in the United Kingdom slumped 47% in the first half of the year.

The industry is already playing catchup in the race to develop electric vehicles and self-driving cars.

"From a technological point of view, the future is written right now in China and United States," Hofmann said.

The United Kingdom and European Union have not yet been able to strike an agreement on the terms of their divorce and future trading relationship. With time running out, businesses are increasingly worried Britain could crash out of the bloc without a deal.

The UK industry group estimates that new EU-UK tariffs on imports would cost the European car industry at least £5 billion. And a chaotic Brexit would cause manufacturing headaches for the carmakers because customs checks could cause delays in deliveries, playing havoc with complex just-in-time supply chains.

BMW's (BMWYY) senior vice president for electronics, Christoph Grote, said his company views Brexit as "a very negative thing."

It is shutting its Mini factory in England for one month of maintenance immediately after Brexit because it can't be sure of getting the parts it needs once the divorce has happened in March 2019.

Another risk to the industry comes from damage to academic research projects that support innovation. The European Union is funding a number of transportation and vehicle research projects run jointly by universities and private companies across the bloc.

This kind of partnership could become more difficult after Brexit, Grote warned.

"Any barrier that's being created does not lead to more cooperation," he told CNN Business.

British universities are already feeling the chill. Data from the UK Department for Business, Energy & Industrial Strategy shows the proportion of EU research funding going to British universities has dropped since the Brexit vote in 2016.

BMW and Volkswagen are just two of many companies in the industry that have warned about the costly consequences of Brexit.

Automakers including Nissan (NSANF) and Honda (HMC) have big factories in the United Kingdom. Ford (F) also makes engines at two plants. Some have warned they would have to quit the United Kingdom if trade barriers after Brexit wipe out their profit margins.

German engineering group Schaeffler (SCFLF) said Tuesday it was planning to close two plants in the United Kingdom. The biggest carmaker in the country, Jaguar Land Rover, has cited uncertainty over Brexit as one reason for putting 1,000 workers on a three-day work week until Christmas.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 159036

Reported Deaths: 3879
CountyCasesDeaths
DeSoto10563104
Hinds10414204
Harrison7397113
Jackson6655128
Rankin6057107
Lee540396
Madison5120107
Forrest394786
Jones376188
Lauderdale3663147
Lafayette341053
Washington3321108
Lamar301950
Oktibbeha255262
Lowndes252867
Bolivar248084
Panola237353
Neshoba2280122
Marshall225051
Leflore211191
Monroe209778
Pontotoc208131
Lincoln200566
Sunflower194155
Warren183058
Tate180451
Union172926
Copiah170840
Pike166760
Scott161330
Yazoo161340
Itawamba159936
Alcorn159328
Pearl River158969
Coahoma155943
Prentiss154931
Simpson154053
Adams147252
Grenada145445
Leake141844
Holmes134461
Covington130040
Tippah130030
George129525
Winston128726
Hancock127641
Wayne123024
Attala122834
Marion121447
Tishomingo114043
Chickasaw110732
Newton110529
Tallahatchie99427
Clay96127
Clarke94853
Jasper87023
Stone82015
Calhoun79513
Walthall79330
Montgomery78426
Carroll75515
Lawrence74614
Smith74216
Yalobusha74228
Noxubee73317
Perry68726
Tunica63019
Greene62422
Jefferson Davis59617
Claiborne59216
Amite57615
Humphreys55219
Quitman5107
Benton50418
Kemper48018
Webster47714
Wilkinson40722
Jefferson38312
Choctaw3637
Franklin3635
Sharkey32917
Issaquena1214
Unassigned00

Alabama Coronavirus Cases

Cases: 256828

Reported Deaths: 3711
CountyCasesDeaths
Jefferson34214511
Mobile20299366
Madison13925150
Tuscaloosa13591156
Montgomery12659238
Shelby1095877
Baldwin9163137
Lee792566
Morgan710851
Etowah677467
Calhoun6695121
Marshall665757
Houston548239
DeKalb504738
Cullman472043
St. Clair451857
Limestone447546
Lauderdale436054
Elmore427564
Walker3818111
Talladega374457
Jackson350723
Colbert336443
Blount310043
Autauga287342
Franklin259734
Coffee254115
Dale242054
Dallas232932
Chilton230841
Russell22813
Covington227934
Escambia206131
Tallapoosa189191
Chambers185950
Pike162214
Clarke161819
Marion146136
Winston141924
Lawrence135336
Pickens127720
Geneva12638
Marengo125224
Bibb123938
Barbour120629
Butler118842
Randolph105922
Cherokee105524
Hale99732
Fayette96316
Clay93525
Washington93319
Henry8946
Monroe83811
Lowndes82129
Cleburne79914
Macon76522
Crenshaw72930
Conecuh72414
Lamar7138
Bullock70919
Perry6927
Wilcox64918
Sumter58922
Greene44218
Choctaw43519
Coosa3724
Out of AL00
Unassigned00
Tupelo
Overcast
45° wxIcon
Hi: 50° Lo: 42°
Feels Like: 45°
Columbus
Overcast
46° wxIcon
Hi: 55° Lo: 43°
Feels Like: 46°
Oxford
Overcast
41° wxIcon
Hi: 43° Lo: 36°
Feels Like: 36°
Starkville
Overcast
43° wxIcon
Hi: 53° Lo: 39°
Feels Like: 43°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather