What’s Driving Automakers Out of Europe?

on Mar15
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Automakers, in quick succession, have moved in recent weeks to end parts of their operations in Europe. Nissan is the latest: On Tuesday, it confirmed that it would cease assembling Infiniti cars at its plant in northeast England.

The moves, during Britain’s wrenching debate over its departure from the European Union, known as Brexit, have raised the question: Is Brexit forcing the carmaking industry out of Britain?

It’s not quite so simple. Traditional car manufacturers, in Britain and in Europe over all, have been buffeted by forces around the world, and they assess where they want to make the next model of a car every few years or so.

As automakers allocate resources, they have been balancing the need to respond to these changes with the justifications for producing cars in places like Britain.

Here are some of the forces reshaping the industry.

In the wake of Volkswagen’s diesel-cheating scandal in 2015, when it used software to trick emissions tests, awareness of the harmful effects of fossil fuels has prompted stricter regulation throughout the Continent.

Some German cities are banning older diesel engines in an effort to reduce pollution in urban areas. London has initiated a levy on drivers of older diesel vehicles. Britain and France plan to phase out sales of new diesel and gasoline-powered cars by 2040.

Norway is aiming to sell only electric cars by 2025, while India is aiming to be all electric by 2030.

Carmakers are racing to respond. Volkswagen said Tuesday that it intended to sell 22 million electric cars over the next 10 years, compared with its previous goal of 15 million, and that the company would aim to be carbon neutral by 2050.

The investments necessary for building electric cars have added to cost pressures for automakers that, in some cases, have struggled to turn a profit in Europe.

In justifying the closing of its Swindon factory, Honda said it wanted to focus on electrification. “The significant challenges of electrification will see Honda revise its global manufacturing operations, and focus activity in regions where it expects to have high production volumes,” the company said.

As carmakers channel billions of dollars into grabbing a portion of the electric car market, many are looking to China, which is the world’s largest maker and seller of electric cars.

China wants one in every five cars sold to run on an alternative fuel by 2025, and officials have said the country will get rid of internal combustion engines in new cars altogether. The country’s rules also require carmakers to sell more alternative-energy cars if they want to continue selling regular models.

This has prompted car companies to realign where they make and develop cars.

Tesla has opened a factory there. Volkswagen signed an agreement with the Anhui Jianghuai Automobile Group last year to develop an electric vehicle. General Motors has made China the hub of its electric car research and development, while both Renault-Nissan and Ford have joint electric-car ventures in China.

In their efforts to grab a share of the growing market for electric cars, traditional car companies are competing not just with each other but also against technology companies.

Uber, Alphabet and Tesla are channeling money into electric cars and autonomous cars, while reshaping the way people travel with ride-hailing services.

This has prompted rivals to team up, or to work with the technology companies, so that they are not left behind.

This shift has accelerated change and added to costs, said Peter Wells, a professor at the Center for Automotive Industry Research at the Cardiff Business School in Wales. And that has prompted companies to scrutinize whether they should maintain operations in markets that are not expected to grow and could become more difficult to serve.

“Companies around the world are having to re-evaluate their positions,” Mr. Wells said.

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