(Bloomberg) -- Stellantis NV plans to close a van factory in Luton, England, in a rebuke of the government mandating more electric vehicle sales.
The owner of Vauxhall announced Tuesday that it intends to shift production of electric vans from the Luton site, which employs around 1,100 people, to its other UK van plant in Ellesmere Port.
While Stellantis said it’s proposing the move in the context of the government’s “stringent” EV mandate, it’s also restructuring in several other markets as a result of its own financial woes.
Stellantis threatened to pull out of the UK entirely earlier this year, warning that the government’s EV objectives are too ambitious. The UK introduced rules requiring that 10% of new van sales this year be zero-emission, rising to 70% by the end of the decade. Passenger cars are subject to even higher targets.
Automakers face fines of as much as £15,000 per vehicle if they fail to comply, though they can avoid penalties by using a credits-trading system and exceeding requirements in later years. The targets for electric vans already were eased last year after talks with manufacturers.
“We need an urgent review of the automotive market and the regulation intended to drive it,” Mike Hawes, chief executive officer of the industry trade group Society of Motor Manufacturers and Traders, said in a statement late Tuesday. “The industry is hurting, profitability and viability are in jeopardy and jobs are on the line.”
Stellantis said its plans for Luton are subject to consultation with employees and trade unions. It expects to transfer hundreds of jobs to Ellesmere Port and invest an additional £50 million ($63 million) there.
The UK union Unite called the company’s proposal “a complete slap in face for our members in Luton,” where it says Vauxhalls have been manufactured for 120 years.
“We stand ready to support our members in doing whatever we can to ensure that historical vehicle manufacturing is maintained in Luton and we call on the government to do the same,” the union said.
Stellantis isn’t alone in shrinking output as EV demand wanes in Europe. In Germany, Volkswagen AG is pushing for unprecedented cuts at its namesake brand, including closing as many as three plants, laying off thousands of workers and cutting wages. Ford Motor Co. is also dialing back EV output in the country and eliminating 4,000 positions across the region.
Stellantis makes small electric vans across its Vauxhall, Citroën, Peugeot, Opel and Fiat brands at Ellesmere Port, following a £100 million investment to turn the factory into an electric-only plant.
The manufacturer’s former UK chief Maria Grazia Davino left last month to join Chinese rival BYD Co.
--With assistance from Craig Trudell.
(Updates with trade group’s statement in sixth paragraph, union’s reaction in the eighth paragraph.)
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