Business minister Jonathan Reynolds has said that he did “everything possible” to prevent the planned closure of Vauxhall’s Luton van-producing plant, where 1,100 jobs are at risk.
The closure was blamed on the government’s plan to force carmakers to build more electric vehicles, fining them £15,000 a car if they miss their targets. The government will review these rules, said Mr Reynolds.
The blow comes after a comparatively upbeat time for carmaking in the UK. Last year, a slew of investments were announced, appearing to arrest the industry’s slow decline and even offer opportunities for growth.
Carmakers including Aston Martin, Jaguar Land Rover (JLR), Mini and Nissan announced plans to either build battery plants or signed deals to acquire the technology to develop fleets of new electric vehicles.
It was not all good news. Britain’s fledgling battery-maker Britishvolt went under last January, taking with it the UK’s only independent electric powerplant developer.
But deals like JLR’s decision to open a £4bn battery plant secured jobs in the industry after years of shrinking, with recent losses including the Honda factory in Swindon, which closed in 2021 after 36 years with the loss of 3,500 jobs.
But now, the threat of factory closures is back after Vauxhall owner Stellantis said its Luton van plant faces the axe.
Stellantis, which owns the plant, said months ago it would review its operations in the UK in light of the stringent rules on electric cars. It plans to merge its operations with its plant in Ellesmere Port, which has already been converted to making electric vans.
Vauxhall owner Stellantis is not the only company suffering a slowdown. Volkswagen said on Tuesday it plans to close down a factory in China as sales there slow for the company. European car sales, after bouncing back following the pandemic, are also struggling, particularly in electric vehicles.
It is not that EV sales are not rising – they are just not rising fast enough to justify the billions of pounds being spent to switch production lines and supply chains to making the new, battery-powered models, and bottom lines are being hit.
Car builders say that the target of about a fifth of cars being electric is about double the natural takeup today of the vehicles. To get the public to buy them, they are having to slash prices.
But Britain’s electric carmaking targets are not solely to blame for Luton’s planned closure or the industry’s broader troubles, said Andy Palmer, who used to be Aston Martin’s chief executive, as well as a top boss at Nissan.
