Stellantis proposes Luton plant closure amid ZEV mandate row

Vauxhall owner Stellantis has announced plans to close its historic commercial vehicle factory in Luton, just months after bosses threatened closures as part of a battle with the UK government over its zero-emission vehicle (ZEV) mandate.

The announcement, which puts 1100 jobs at risk, is part of a move to “consolidate” Stellantis’s UK manufacturing footprint to one site at Ellesmere Port, which last year began making EVs following a £100 million upgrade.

Stellantis said this decision is one that will “potentially contribute to greater production efficiency” – something it said would also allow it to meet increasingly stringent ZEV mandate targets.

The multinational giant said that if proposals announced today are given the go-ahead, all of Luton’s production operations would be moved to Ellesmere Port to create “an all-electric, sustainable vehicle hub”.

More than £50m would then be spent again upgrading the Merseyside site to take on the extra work.

Just a few hundred jobs would be moved north, Stellantis said.

A consultation has been announced for affected workers, with those unable to make the move being offered retraining or potentially offered jobs at neighbouring businesses.

In response, a government spokesperson said: “While it’s encouraging to see Stellantis investing in the future of its Ellesmere Port plant, we know this will be a concerning time for the families of employees at Luton who may be affected.

“We have a longstanding partnership with Stellantis and we will continue to work closely with them, as well as trade unions and local partners on the next steps of their proposals.”

Stellantis has long argued against the ZEV mandate, and this August, CEO Carlos Tavares threatened plant closures as part of a review in its UK operations.

Tavares said the ZEV mandate was “hurting significantly our business model”, as car makers were being forced to sell more EVs while no incentives were offered to buyers and the industry grappled with a downturn in EV interest.

Under the mandate, car makers must achieve an EV sales mix of 22% in 2024, rising incrementally each year to 80% by 2030, or face heavy fines for every non-electric car sold over the threshold.

Tavares’s words came a month after former Stellantis UK boss Maria Grazia Davino warned that the company could stop building vehicles in the UK if the government’s electrification initiatives created a “hostile” trading environment.

Before Stellantis’s announcement earlier today, reports suggested the government was about to announce a consultation on the ZEV mandate following talks between ministers and car makers last week. At the time of writing, nothing has officially been announced.

The Luton plant has a history dating back nearly 120 years. It was opened in 1905, when Vauxhall needed to expand from its original site in South London, and has produced vehicles ever since then.

General Motors bought Vauxhall in 1925 and rapidly expanded the Bedfordshire factory. In 1931, it launched commercial vehicle brand Bedford, which made lorries, buses and coaches at the site.

During the Second World War, the plant was used to make lorries and tanks.

When civilian production returned, it initially focused on cars for export before starting production of the Wyvern and Velox cars. In the 1950s, around 36,000 people worked at the site.

Vauxhall opened its Ellesmere Port factory in the 1960s, while some of the brand’s other cars were badge-engineered efforts produced by other GM plants in Spain.

Luton found huge success in the 1970s with the Cavalier, which proved such a success a new production line and paint shop were built.

In 1986, the adjacent Bedford Vehicles factory was turned into a joint venture with Isuzu, before GM regained full control in 1998. It’s now run by Stellantis subsidiary IBC Vehicles Limited.

The current Luton plant is located on the site of that Bedford Vehicles facility, adjacent to the original Vauxhall car factory.

Since Vauxhall became a part of Stellantis in 2021, it has produced medium and large vans for various Stellantis brands.