A British start-up concentrating on electric motors for vehicles is considering a factory in Europe following Brexit, to avoid potential tariffs and charges on exports.
Oxford-based Yasa, which has just closed a funding round that saw £18 million (€20 million) of fresh investment, is in advanced negotiations with a major European brand that will require it to build a new facility to meet demand if successful.
Chief executive Chris Harris told the Financial Times the business would be forced to put the site in Europe if there is a bad deal or no-deal scenario because its European customers will not be happy to pay the cost of tariffs.
‘That will be in the UK if it will come up with a decent deal. Otherwise, we will have no choice but to put that in Europe,’ he said. ‘Where we see our opportunities, they are all in Europe, far more so than the US or China. It’s where all of our growth will come from in the next decade. Emotionally we want the production to remain in the UK, and we want that wealth to remain in the UK, but we have to be driven by business sense.’
As it strives to become a leader in electric vehicle (EV) technology, Yasa is the type of business that the UK is looking to nurture. The last UK Government put £246 million (€275 million) into future battery development and set up an Industrial Strategy with the aim of helping Britain attract the investment needed to secure its industries for the future.
Even though Britain has not yet left the EU, the threat of Brexit has already caused investment into the UK auto industry to dry up, falling to £589 million (€659 million) last year compared to an average of £2.7 billion (€2.9 billion) in the years before the Brexit referendum.
Yasa’s potential move highlights the problem that Brexit is causing the wider automotive industry. The fact that such a small and niche supplier is considering its UK-based future as a result of the threat of no-deal shows that other companies, which would be hardest hit by tariffs and customs delays, could go the same way. It is unlikely that such suppliers would be able to increase costs for their customers without losing business to cheaper European alternatives.
The new funding will enable the company to scale to meet rapidly growing customer demand from the automotive and aerospace sectors. Existing investors Parkwalk Advisors and Universal Partners have been joined in the round by Oxford Sciences Innovation (OSI) and Inovia Capital.
‘This funding round is helping prepare the company to meet the rapidly increasing volume of demand for our electric motors and controllers from our automotive customers,’ said Harris. ‘We’re pleased to welcome OSI and Inovia onboard as investors – both share our long-term vision for the company and bring tremendous operational experience that will help us realise our full potential.’