Stellantis, the parent company of Vauxhall, has announced plans to close its van manufacturing plant in Luton, Bedfordshire, putting 1,100 jobs at risk. The decision marks the end of nearly 120 years of vehicle production in Luton and highlights the challenges facing the UK automotive sector during the transition to electric vehicles.
The company plans to shift production to its Ellesmere Port facility in Cheshire, which will receive a £50 million investment. Ellesmere Port, already producing smaller electric vans, will now take on the manufacturing of medium-sized Vivaro electric vans, previously slated for Luton. This comes just a year after Stellantis announced the Luton site would produce electric vans for its Vauxhall, Citroën, Peugeot, and Fiat brands.
Blaming Economic and Regulatory Pressures
Stellantis cited challenging UK economic conditions and the government’s zero-emission vehicle (ZEV) mandate as reasons for the closure. The mandate sets ambitious sales quotas for electric vehicles, with manufacturers required to ensure 22% of new vehicle sales are electric in 2024, rising to 80% by 2030. Non-compliance carries significant fines, a concern that has sparked industry-wide criticism of the policy.
However, industry insiders suggest the closure is more closely linked to Stellantis’s excess factory capacity across Europe rather than solely the ZEV mandate.
Union and Government Response
The Unite union, representing many of the affected workers, has called on the government to intervene. A union spokesperson described the move as a “slap in the face” for Luton employees, while acknowledging the potential benefits for Ellesmere Port.
The announcement is a setback for the UK government’s efforts to sustain domestic vehicle production amid a global industry shift. Business Secretary Jonathan Reynolds expressed “profound concern” about the state of the automotive sector during a meeting with industry leaders, emphasizing the importance of retaining manufacturing jobs in the UK.
The government has committed to launching a consultation on the ZEV mandate before Christmas. This review may explore flexibilities such as allowing manufacturers to offset lower electric vehicle sales in early years with over-compliance in later years or adjusting penalties for exceeding fossil fuel vehicle quotas.
Industry-Wide Struggles
The closure of the Luton plant comes as carmakers worldwide face slowing demand and intense competition. Last week, Ford announced plans to cut 4,000 jobs across Europe, including 800 in the UK, while Volkswagen is preparing to close three factories in Germany.
Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), warned that the ZEV mandate, combined with challenging market conditions, could cost the industry £6 billion in 2024. “The industry is hurting; profitability and jobs are at risk,” he said, calling for an urgent review of regulations to ensure they are feasible.
Future of the ZEV Mandate
While the UK government is expected to maintain its long-term target to phase out petrol and diesel vehicles by 2030 and hybrids by 2035, adjustments to short-term implementation rules may be introduced. These could include clarifications on which hybrid vehicles can be sold post-2030.
A government spokesperson acknowledged the closure as a difficult development for the families affected in Luton, while emphasizing Stellantis’s continued investment in Ellesmere Port as a positive sign for the future of UK electric vehicle production.