The owner of Vauxhall, Stellantis, has started a strategic evaluation of its two UK van manufacturing facilities to perhaps close them permanently, according to CEO Carlos Tavares.
As part of a dispute with the UK government over its resistance to the ZEV mandate, which is intended to increase the sales of electric vehicles, Stellantis is threatening to close the Ellesmere Port and Luton operations.
During the company’s results call last week, Tavares informed analysts, “The ZEV mandate is hurting our business model significantly, and this is triggering a strategic review of our business model, including the manufacturing footprint.”
According to Tavares, the company and the government are currently engaged in “an intensive and productive dialogue” regarding the mission. He continued, “At this point, we don’t have the answers we need.”
The CEO’s remarks intensify Stellantis’s criticism of the mandate, which requires brands to raise their electric vehicle sales to 22% of their total new car sales in the UK this year. While companies can lower this target through various loopholes, failing to meet it results in a £15,000 penalty for each combustion-engine vehicle sold above the limit.
Stellantis has made a strong case against the goal, claiming that demand does not equal it. Maria Grazia Davino, the company’s UK director, first brought up the prospect of Stellantis stopping van manufacturing due to the problem in June.
The new Labour government is facing its first threat from an automaker to shut down a major manufacturing facility if certain criteria are not satisfied, and Tavares’s newest remarks increase the stakes even more.
Currently, Stellantis manufactures mid-sized combustion-engine vans in Luton, north of London, and compact electric vans for its brands, including Peugeot and Citroën, in Ellesmere Port, near Liverpool.
At its Luton facility, Stellantis has committed to producing electrified variants of its mid-sized van lineup starting in 2019.
“We cannot be the victims of the ZEV directive and produce these in the UK. The corporation cannot accept this discrepancy, according to Tavares.
David Bailey, a business economics professor at the Birmingham Business School, told Autocar recently that the threat is real. Sadly, Stellantis is a careless multinational with significant resources spread around Europe. If they so want, they can change production.
In terms of cost competitiveness, the UK has had difficulty competing with other southern and eastern European industrial hubs. Stellantis is getting ready to start production of the identical K0 van line that was manufactured at Luton in 2025 at a renovated plant in Turkey that is jointly operated by Koc Holdings.
Meanwhile, at its Mangualde plant in Portugal, Stellantis will begin producing the identical Citroën Ñ-Berlingo, Peugeot e-Partner, Opel Combo-e, and Fiat e-Doblo as Ellesmere Port, likewise starting in 2025.
Stellantis would be walking away from a £100 million investment in Ellesmere Port to convert the facility to make vans from the Vauxhall Astra if it follows through on its threat. The government reportedly contributed £30 million to the refurbishment. In contrast, Luton received a £100 million refurbishment in 2019.