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Stellantis blamed UK rules on the sale of electric vehicles as it announced plans to close its van factory in Luton, putting around 1,100 jobs at risk.
The owner of Vauxhall and Peugeot said on Tuesday that Britain was “challenging” EV the sales quota played a “significant role” in its decision to consolidate its UK operations at its Ellesmere Port plant in Cheshire.
While the group aims to move “hundreds of jobs” from the Luton site, the decision comes as a blow to the UK car industry following the closure of Honda, Ford and JLR plants over the past decade.
Ford last week announced 800 job cuts in the UK due to slower-than-expected sales of electric vehicles, while Nissan has warned that jobs at its Sunderland factory, Britain’s largest, could be at risk if the government does not relax rules on the sale of electric vehicles.
Business Secretary Jonathan Reynolds unveiled a “fast-track” consultation on easing the UK’s strict electric vehicle quota scheme on Tuesday night, following industry warnings that public appetite for battery-powered vehicles was lower than expected.
“The Transport Minister and I heard you loud and clear about the need for support to make this transition a success,” Reynolds said at the industry dinner. “I want to do everything possible to encourage the take-up of electric vehicles, but I also want to do everything possible to ensure that electric vehicles are made here in Britain.”
The current scheme, modeled after China’s policy, requires a certain percentage of each carmaker’s annual sales to be zero-emission vehicles, with the target increasing each year.
Ministers are determined to stick to the target of phasing out sales of new petrol and diesel cars by 2030, but several concessions in the program — introduced to make it easier for carmakers to avoid fines — could be extended through the review, people close to the industry and government said.
These include a measure under which automakers that fail to sell enough electric vehicles can buy credits from rivals to avoid fines, and an exemption that allows automakers that miss early targets to “borrow” from the future by overachieving in later years .
Ford of the UK boss Lisa Brankin welcomed the prospect of a review, calling the current scheme “unworkable”.
She added: “The ultimate goal is not in question, but current demand for electric vehicles is lower than expected and not on the prescribed trajectory.”
Industry body the Society of Motor Manufacturers and Traders said Stellantis’ decision was “a sobering reminder of the challenge and costs this industry faces in developing new EV technologies and transitioning a market that is not yet fully ready”.
The Unite union called Stellantis’ move “a complete slap in the face to our members in Luton, where Vauxhall vehicles have been manufactured for 120 years”. The location was established in 1905, and mass production of vehicles began in the 1930s.
Stellantis warned in June that it could halt production in the UK unless the government does more to boost demand for electric vehicles or changes its current electrification policy.
Earlier on Tuesday, Reynolds said the decision was “better than it could have been”, as the company considered moving work to other European plants.
“We could have lost those two key (production) lines to another factory,” he told the business committee of the lower house of parliament.
He added that ministers learned of the plans to close Luton at the start of July and “hit back . . . very hard”, adding: “This is a very difficult day for the people of Luton and we will give them our full support.”
Stellantis manufactures Vauxhall, Peugeot, Citroën, Opel and Fiat vans at the Luton and Ellesmere Port plants, as well as some Toyota models under a joint production agreement.
The group was in talks to expand Luton to produce only electric vehicles, but the cost of meeting UK sales rules pushed the business into the decision, which will “potentially contribute to greater production efficiency”, it said.
Stellantis said it plans to spend £50m upgrading the Ellesmere Port plant as part of the consolidation process. The group employs around 840 people in Cheshire.
It added: “A comprehensive support plan for affected employees in Luton, including hundreds of jobs to be relocated to the manufacturing site at Ellesmere Port, will be available with dedicated job support within the highly dynamic Luton area.”
Additional reporting by Sylvia Pfeifer in London
