Vauxhall threatens Luton factory closure amid ZEV mandate row

Nine months after pledging to invest in EV production at its historic Luton factory, the Stellantis Group is planning to close the plant altogether and consolidate electric van production at its Ellesmere Port facility instead. 

The proposed closure of Luton with the loss of 1,100 jobs is being seen as a slap in the face for the government, which has so far resisted pleas from the car industry to ease up on the UK’s ZEV mandate, which sets out targets for EV sales as a percentage of every car maker’s annual sales of cars and vans.

Professor of Business and Sustainability at Cardiff University and Director of the Centre for Automotive Industry Research, Peter Wells, told Auto Express that the move “doesn’t come as a surprise to the industry or policymakers”. 

He continued, saying: “The events at Vauxhall Luton need to be seen in this context: Stellantis has over-capacity in Europe and has to drive down costs, just as is the case for other well known brands. The ZEV mandate may be a proximate cause, but in my assessment the mandate only stands as emblematic of the failure of the industry to adapt quickly enough, and to provide vehicles of the type and price the market demands.”

Slower than expected demand for EVs means car makers face big fines for failing to meet the official targets, while the industry’s repeated protestations that the government is not doing enough to incentivise consumer demand for new electric cars has so far fallen on deaf ears. That could all be about to change though, because reports suggest Business Secretary Jonathan Reynolds is due to announce a consultation on changing the terms of the ZEV mandate imminently.

When Stellantis pledged its new investment for Luton back in February 2024, Plant Director Mark Noble marked the announcement as an exciting new chapter in the famed factory site’s history, saying, “limited production of our medium electric van in Luton from next year, when the first customer vehicles will roll off the production line, is a fitting way to mark Luton’s 120th anniversary.”

However, even then, Stellantis Group’s managing director in the UK, Maria Grazia Davino, was warning the firm expected a ‘quid pro quo’ from politicians. 

“Whilst this decision demonstrates Stellantis’ confidence in the plant, this first step in its re-development towards a fully electric future requires the UK Government to stimulate more demand in the electric vehicle market and support manufacturers that invest in the UK for a sustainable transition,” she said.

That the plans announced only this year have now been superseded by a controversial decision to close the historic Luton plant, would suggest Stellantis doesn’t believe the government has delivered. However, in announcing its Luton closure plan, the firm has refrained from blaming a government failure directly, saying only that the decision to shut Luton was “made within the context of the UK’s ZEV mandate”.

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