Stellantis NV, owner of the Vauxhall brand, has announced plans to close its van manufacturing plant in Luton, England.
The move comes as the automaker faces mounting pressure from the UK’s stringent zero-emission vehicle (ZEV) sales mandate.
The Luton factory’s production will be relocated to Stellantis’s Ellesmere Port facility, which focuses exclusively on electric vehicles (EVs).
The company cited efficiency improvements and plans to invest an additional £50 million ($63 million) in the Ellesmere Port plant as part of this transition.
The closure is expected to impact around 1,100 employees in Luton, with hundreds of jobs being transferred to the revamped electric-only facility.
Stellantis’ share price was down by 4.70% on Tuesday.
UK’s zero-emission mandate pushes automakers to adapt
The UK government’s ZEV mandate requires automakers to ensure that 10% of new van sales are zero-emission in 2024, a figure set to rise to 70% by 2030.
Non-compliance can lead to fines of up to £15,000 per vehicle, though companies have the option to trade compliance credits or make up deficits in subsequent years.
Stellantis has previously warned about the potential impact of these strict targets, calling for more government incentives to boost EV adoption.
Other automakers in the UK have echoed similar concerns, arguing that current consumer demand for EVs is insufficient to meet the ambitious sales goals.
Investment in Ellesmere Port: A shift towards electric vans
Stellantis has already invested £100 million in transforming the Ellesmere Port facility into an electric-only plant, where it produces small EV vans under its Vauxhall, Citroën, Peugeot, Opel, and Fiat brands.
The additional £50 million planned investment is aimed at increasing efficiencies and capacity to handle the production transferred from Luton.
While the government welcomed Stellantis’s investment in Ellesmere Port, it acknowledged the uncertainties faced by employees affected by the closure in Luton.
Development a “major concern” for UK auto industry: SMMT
The Society of Motor Manufacturers and Traders (SMMT) called Stellantis’s decision a “major concern” for the UK automotive sector.
It highlighted the financial and technological challenges of transitioning to EV production while consumer demand remains subdued.
“This is a sobering reminder of the challenges this industry faces,” the SMMT said.
“The UK has arguably the toughest targets and most accelerated timeline in the world, yet lacks the incentives necessary to drive sufficient demand.”
Industry data showed that EV production, including hybrids, dropped by 7.6% in the first half of 2024.
The automotive sector has repeatedly urged the government to offer stronger incentives, such as subsidies or tax breaks, to make EVs more attractive and affordable to consumers.
Government response and support measures
In response to the concerns raised, the UK government reiterated its commitment to supporting the transition to zero-emission vehicles.
A spokesperson highlighted the £300 million funding allocated to drive EV adoption and emphasized the importance of transitioning the automotive industry while safeguarding jobs.
Despite these assurances, Stellantis’s announcement underscores the broader challenges faced by manufacturers as they navigate the evolving regulatory and market landscape.
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