The owner of Vauxhall has announced plans to close its van-making factory in Luton, putting about 1,100 jobs at risk.
Stellantis, which also owns brands including Citroen, Peugeot and Fiat, said it would combine its electric van production at its other UK plant in Ellesmere Port in Cheshire.
Rules imposed to speed up the transition to electric vehicles (EV) in the UK partly drove the decision, the company said.
It comes amid growing concerns among car manufacturers over EV sales targets, with many, including Stellantis, calling for the government to do more to boost consumer demand.
Following the Luton plant announcement and intense pressure from industry leaders, Business Secretary Jonathan Reynolds said the government would consult on changes to EV sales rules, which is officially called the zero-emission vehicles mandate, because it was not working as expected.
“I get the seriousness and the urgency of the situation,” he said, adding that the decision to close the Vauxhall van factory was a “difficult day for Luton”.
As part of the shift to electric, manufacturers are required to sell a certain percentage of cars and vans that do not emit any emissions.
Current rules state EVs must make up 22% of a carmaker’s car sales, and 10% of van sales this year.
For every sale that pushes it outside the mandate, firms must pay a £15,000 fine. There are flexibilities in the system, allowing manufacturers who cannot meet the targets to buy “credits” from those that can.
But car brands with factories in the UK have been urging the government to relax the rules, arguing that EV demand is not strong enough and more incentives are required for drivers to go fully electric.
Stellantis’s Vauxhall plant in Luton currently builds petrol and diesel vans and had been due to start making its medium-sized Vivaro electric van from 2025, before the decision to close it.
Electric models from other Stellantis brands, including Citroën, Peugeot and Fiat, were also set to be built there. Vauxhall’s Luton director said at the time it would be a “fitting way” to mark the factory’s 120th anniversary.
Now, the electric model that had been scheduled for manufacturing at Luton will move to Ellesmere Port, which is to get a £50m cash injection.
Three years ago, Stellantis invested £100m into revamping the Ellesmere Port site to make electric vehicles. It currently builds a range of small electric vans.
Production of Stellantis’s conventional vans will be transferred to France
The company said the closure of Luton in spring next year would “potentially contribute to greater production efficiency”. The decision to consolidate production is subject to consultation.
It said hundreds of permanent jobs would be created at Ellesmere Port and that it would provide relocation assistance to workers who wanted to transfer from Luton.
Luton’s Vauxhall factory opened in 1905, with the first vans being assembled there in 1932.
At its height the plant employed 37,000 people, but that number has been falling since the 1960s. The final car rolled off the production line in 2002, though van manufacturing, with the production of the Vivaro model, continued.
Earlier this year, Stellantis chief executive Carlos Tavares warned that the future of both Luton and Ellesmere Port were in doubt.
In July, he announced a review of the future of both plants, citing the impact of the EV sales mandate.
‘Major concern’
The car industry as a whole has been repeatedly demanding the government provide better incentives for people to buy electric, ahead of the ban of sales of new petrol and diesel vehicles commencing in 2030.
Nissan, which builds EVs at its plant in Sunderland, has said the rules are “undermining the business case for manufacturing cars in the UK, and the viability of thousands of jobs and billions of pounds in investment”.
Last week, its rival Ford announced it will cut 800 jobs in the UK over the next three years. It said this was partly because of weaker demand for EVs.
The Society of Motor Manufacturers and Traders (SMMT) has previously said support packages are needed to make the electric vehicles switch more attractive and affordable.
Sales of electric cars have been increasing – in October, they made up nearly one out of every four cars registered. However, industry sources insist this is largely down to unsustainable discounting.
The SMMT said Stellantis’s announcement was a “major concern to UK automotive manufacturing but, most importantly, to the livelihoods of many”.
“It is also 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,” it added.
“The UK situation is particularly acute with arguably the toughest targets and most accelerated timeline in the world, yet without the consumer incentives that would drive the necessary demand.”
The government said it was backing the car industry with more than £300m to “drive uptake of zero-emission vehicles”.
