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Stellantis blamed the UK’s electric vehicle sales rules as it announced plans to shut its van factory in Luton, putting about 1,100 jobs at risk.
The owner of Vauxhall and Peugeot on Tuesday said Britain’s “challenging” EV sales quota played a “significant part” in its decision to consolidate its UK operations at the Ellesmere Port factory in Cheshire.
While the group aims to relocate “hundreds of jobs” from the Luton site, the decision comes as a blow to the UK’s auto industry following a spate of plant closures from Honda, Ford and JLR over the past decade.
Ford last week announced 800 jobs cuts in the UK because of slower-than expected EV sales, while Nissan warned that jobs at its Sunderland plant, the largest in Britain, could be at risk unless the government relaxes its electric vehicle sales rules.
Business secretary Jonathan Reynolds will on Tuesday evening confirm that ministers are exploring watering down the UK’s tough EV quota scheme, following industry warnings that public appetite for battery vehicles is lower than expected.
The current scheme, modelled on China’s policy, requires a certain percentage of each carmakers’ annual sales to be zero-emission vehicles, with the target increasing each year.
Several concessions in the scheme — introduced to make it easier for carmakers to avoid punitive fines — could be widened through the review, according to people close to the industry and government.
These include a measure where carmakers that fail to sell enough EVs can buy credits from rivals to avoid fines, and a carve-out that allows carmakers that miss early targets to “borrow” from the future by overachieving in later years.
Industry body the Society of Motor Manufacturers and Traders said Stellantis’ decision was “a sobering reminder of the challenge and cost this industry faces in developing new EV technologies and transitioning a market that is not yet fully ready”.
In June, Stellantis had warned that it could stop production in the UK unless the British government did more to stimulate demand for electric vehicles or change its current electrification policy.
The group already makes Vauxhall, Peugeot, Citroën, Opel and Fiat branded vans at the Luton and Ellesmere Port factories, as well as some Toyota models under a joint manufacturing agreement.
Stellantis had been in talks to expand Luton to manufacturing only EVs, but costs of meeting the UK’s sales rules pushed the business into the decision, which “will potentially contribute to greater production efficiency”.
Stellantis said it plans to spend £50mn to upgrade the Ellesmere Port factory as part of the consolidation process. The group employs about 840 people in Cheshire.
It added: “A comprehensive support plan for impacted employees in Luton, including hundreds of jobs to be relocated to the Ellesmere Port manufacturing site, will be made available with dedicated job support within the very dynamic Luton area.”
A government spokesperson said: “While it’s encouraging to see Stellantis investing in the future of its Ellesmere Port plant, we know this will be a concerning time for the families of employees at Luton who may be affected.
“We have a long-standing partnership with Stellantis and we will continue to work closely with them, as well as trade unions and local partners on the next steps of their proposals.”
Earlier this month Unite boss Sharon Graham said the union was in talks with the government and industry to reform the EV mandate to protect jobs. “Much more must be done, but the transition to electrification will not be achieved by threatening workers,” she added.
Additional reporting by Sylvia Pfeifer in London
