Yahoo Finance Vauxhall owner threatens to close UK car factories
The car giant behind Vauxhall has threatened to mothball its UK factories amid a row over net zero targets for electric vehicle (EV) sales.
Stellantis warned on Tuesday that it would be forced to close plants at Ellesmere Port and Luton, where it makes vans, unless the Government relaxed rules forcing manufacturers to sell a certain proportion of EVs.
It has also threatened to reduce the number of petrol and diesel cars it sells in the UK.
The warning dramatically escalates a dispute with the Government over the so-called zero emission vehicle (ZEV) mandate, which requires car makers to sell rising proportions of electric cars annually.
From this year, at least 22pc of cars they sell must be electric and the figure rises gradually to 80pc by 2030. In 2035 the sale of new petrol and diesel cars will then be banned.
However, Maria Grazia Davino, UK managing director for Stellantis, said the rules were out of step with consumer demand and risked making sales unprofitable.
Stellantis makes electric cars and vans at its Ellesmere Port plant and vans in Luton, employing more than 1,000 workers across both sites.
Speaking at a car industry conference in London, Ms Davino told journalists the mandate would have a big impact and “damage the UK”.
‘Hostile market’
Speaking at a car industry conference, she told journalists the mandate would have a big impact and “damages the UK”.
Ms Davino added: “We have undertaken big investments in Ellesmere Port and in Luton, with more to come.
“But if this market becomes hostile to us, we will enter an evaluation for producing elsewhere.”
Asked how long Stellantis would wait for a decision from the Government, she said: “Less than a year.”
Her warning comes after Carlos Tavares, the chief executive of Stellantis, also said that the carmaker would be forced to cut back on sales of petrol cars in the UK to meet the ZEV mandate.
Stellantis is calling for the electric vans it makes in the UK to count towards its quota and for the Government to introduce more financial incentives to boost take up of EVs, which remain too expensive for many consumers.
Ms Davino said: “It means that you have to increase discounts to push the market that isn’t there.
“And this has a number of consequences for the business case.”
The Stellantis boss is the latest car executive to warn that a slowdown in EV sales will make it harder to meet tough net zero targets set out by governments across Europe.
Her comments came as Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), called on the Conservatives and Labour to revive flagging EV sales with tax breaks or other financial giveaways to consumers.
He said: “We’ve seen the uptake of EVs over the last decade or so. But like with any new technology, when you move from the early adopters to mainstream it slows down and it plateaus.
“We’re on that plateau at the moment. So we need to push on and get things moving. And that does mean incentives.”
He also urged politicians not to “move the goalposts” and said Labour’s plan to bring forward a ban on sales of new petrol and diesel cars from 2035 to 2030 risked yet more uncertainty.
The ban was previously due to come into force in 2030 but was delayed by Rishi Sunak in September last year.
But Labour – which according to polling is on course to win the election with a large majority – has vowed to reinstate the original target.
Asked about the proposal, Mr Hawes said: “There’s not much time between 2024 and 2030 to adjust to things, and that would just increase uncertainty.
“However, everyone remains committed to 2035 in terms of decarbonisation of road transport.”
He also questioned what Labour’s 2030 ban meant in practice, noting that the previous government plan had left an opening for carmakers to continue selling hybrids until 2035.
“It was never clear what was going to be permitted for sale between 2030 and 2035,” Mr Hawes added.
“That is still an open question ... Everyone needs to know what they can sell beyond 2030 – and that’s still unclear.”
A Labour spokesman said: “Under the Conservatives, the automotive industry has been set targets without being given the necessary support to meet them.
“Electric vehicles are already cheaper to run, and will soon be cheaper to make than petrol cars. More delay means higher costs for drivers, billions in investment lost, and more good jobs shipped overseas.
“Labour will work with the automotive industry to secure its future, by investing in battery gigafactories and accelerating the electric vehicle charge point rollout to give consumers confidence.”
