Stellantis to Shut Historic U.K. Vauxhall Plant as Automakers Call for BEV Mandate Relaxation

Citing the U.K.'s impending fines for missing battery-electric-vehicle sales targets, Stellantis is pulling the plug on Vauxhall’s historic Luton plant after 119 years of production.

Some 1,100 jobs could be lost at the van plant that assembles other Stellantis brands including Fiat as the automaker redirects production of battery-electric medium commercial vehicles to its Ellesmere Port facility in England’s Northwest.

The U.K.’s mandated fines for automakers missing battery-electric-vehicle sales targets are cited by Stellantis as part of the reason for its decision to close the Luton plant.

Other European automakers and regulators will be closely watching developments in the U.K. as possible early warning signs of what could happen to the auto industry as a whole if government-mandated BEV production outstrips consumer demand.

Stellantis says Ellesmere Port will now get a £50 million ($63 million) cash injection to back up the $100 million ($126 million) the automaker group invested into the plant which currently builds a range of small electric vans. Production of Stellantis's conventional vans will be transferred to a facility in France.

This blow to the U.K.’s auto industry follows calls by Nissan, the country’s biggest volume BEV manufacturer, for an urgent relaxation of the government’s targets for automakers to sell BEVs despite slowing consumer demand.

Currently, automakers in the U.K. are selling just over 18% of their overall output as BEVs and could face huge fines if they do not meet the government’s targets of 22% by the end of this year and 28% by the end of 2025.

Three U.K. manufacturing auto groups this week told government ministers that proposed fines for missing BEV targets under the Zero Emissions Vehicles (ZEV) mandate could cripple the domestic industry. Proposed fines total £15,000 ($18,836) per non-BEV sold.

The industry’s representative body, the Society of Motor Manufacturers and Traders (SMMT) says weak demand for BEVs and the requirement to fulfill sales quotas would cost carmakers £6 billion ($7.53 billion) in 2024 alone, “with the potential for devastating impacts on business viability and jobs”.

Mike Hawes, SMMT chief executive, adds: “We need an urgent review of the automotive market and the regulation intended to drive it. Not because we want to water down any commitments, but because delivery matters more than notional targets. The industry is hurting; profitability and viability are in jeopardy and jobs are on the line. When the world changes, so must we. Workable regulation – backed with incentives – will set us up for success and green growth over the next decade.”

Automakers can offset ZEV mandates by buying credits from BEV-only manufacturers, such as Tesla, or from any of the numerous Chinese-owned brands now muscling into the European markets. But that diverts essential forward-looking investments in technologies and vehicles to offshore companies.

Alan Johnson vice president of manufacturing at Nissan U.K. tells the BBC: “Customers are not buying EVs as much as had been expect 18 months ago. Things have changed and, because of that, we are going to have to redirect a lot of funding that had been dedicated to these [technology development] projects in the U.K. to subsidize manufacturers who have got no industrial operations in the U.K.”

It suggests the government needs to modify the ZEV mandate by offering increased flexibility for automakers on borrowing credits from future years in the short-term and a two-year monitoring period for 2024 and 2025 in place of potentially devastating fines for the industry.

The company says this would allow companies to plan accordingly and ensure the U.K. can deliver on the 80% target by 2030.

Nissan’s chairperson for Africa, Middle East, India, Europe and Oceania (AMIEO) region, says: “The mandate risks undermining the business case for manufacturing cars in the U.K., and the viability of thousands of jobs and billions of pounds in investment. We now need to see urgent action from the government by the end of the year to avoid a potentially irreversible impact on the U.K. automotive sector.”

Pro-BEV lobbyists in the U.K. are lining up to demand the government does not weaken its approach to the ZEV mandate.

One of the interested organizations is the national charging network Be.EV whose CEO, Asif Ghafoor, says automakers have to cope with the current industrial pains.

“The Zero Emissions Vehicle mandate may be painful for manufacturers but it’s working as designed," Ghafoor says. "Drivers nationwide are making the switch to cleaner, cheaper transport, which is ultimately bringing down the country’s emissions and air pollution. The industry needs to buck up its ideas. If their EV strategy isn’t working, perhaps it’s time they rethink it.”

Meanwhile, Fiona Howarth, CEO of Octopus Electric Vehicles, says “whatever mechanisms are considered to support U.K. employers during a transitioning market must not impact the legislation that investors rely on.

“Legislation must be bankable to deliver a key government objective to crowd in private investment. Changing the mandate would mean shooting ourselves in the foot by bowing to the pressure of a few laggard companies.”