Luton Van Factory Closure Imminent as Vauxhall Owner Considers Shutdown

Background

Stellantis, which also owns brands such as Citroen, Peugeot, and Fiat, has stated that it will combine its electric van production at its other UK plant in Ellesmere Port. The company cited rules imposed to accelerate the transition to EVs in the UK as a partial driver of this decision.

Industry Concerns

Car manufacturers have been expressing growing concerns over EV sales targets, with many, including Stellantis, calling for the government to do more to boost consumer demand. In response to the announcement, the government stated that it was “encouraging to see Stellantis investing in the future of its Ellesmere Port plant,” but also acknowledged that this would be a concerning time for employees at Luton who may be affected.

Reasons Behind the Closure

The closure of Luton is attributed to the UK government’s rules requiring carmakers to sell a certain percentage of EVs, which has driven the decision to close the factory. The current rules state that 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.

Industry Pressure

The car industry has been repeatedly demanding better incentives from the government to boost consumer demand for electric vehicles. The Society of Motor Manufacturers and Traders (SMMT) has previously said support packages are needed to make the electric vehicle switch more attractive and affordable.

Reaction from the Government

The government has responded to the announcement, stating that it is “encouraging to see Stellantis investing in the future of its Ellesmere Port plant, but we know this will be a concerning time for the families of employees at Luton who may be affected.”

Consultation on EV Sales Targets

Following intense pressure from industry, Business Secretary Jonathan Reynolds is expected to announce a consultation on the rules later on Tuesday.

Impact on Jobs and Investment

The closure of Luton factory will have significant implications for jobs and investment in the UK automotive sector. The SMMT has stated that Stellantis’s announcement is a “major concern” to UK automotive manufacturing but, most importantly, to the livelihoods of many.

Key Statistics

• 1,100 jobs at risk

• £100m invested by Stellantis into revamping the Ellesmere Port site in 2023

• EV sales targets: 22% of car sales and 10% of van sales this year

• Fine for every sale that pushes it outside the mandate: £15,000

EV Sales Targets

Current rules require carmakers to sell a certain percentage of cars and vans that emit zero emissions. Specifically, EVs must make up 22% of a carmaker’s car sales and 10% of van sales this year. For every sale that pushes a company outside these targets, 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.

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. Following intense pressure from industry, Business Secretary Jonathan Reynolds is expected to announce a consultation on the rules later on Tuesday.

Impact on Vauxhall Luton Plant

The Vauxhall Luton plant currently builds petrol and diesel vans and had been due to start making its medium-sized Vivaro Electric van from 2025. However, following the decision to close it, the electric model scheduled for manufacturing at Luton will move to Ellesmere Port, which is set to receive a £50m cash injection.