The EV Transition Leaves the UK Car Industry Behind

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(Bloomberg) – Tony Vitty has been unemployed for years at the Vauxhall van factory in Luton, north London. However, the 74-year-old retiree is talking about plans by parent company Stellantis NV to close the site as if he is losing his job.

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“It’s sad,” the former quality control manager said of the 1,100 workers now at risk. “At least half of them have mortgages, and there is no such job. It will end up being a ghost town.”

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Vauxhall has been inextricably linked to Luton for 120 years, creating jobs and boosting the local economy – at its peak, it employed around 37,000 people in the town. Local residents are not the only ones feeling the pain as the UK car industry continues to sink into crisis, as demand for petrol-powered cars falls and manufacturers struggle to meet government targets for the adoption of electric vehicles. UK car production fell by 15% in October, its eighth consecutive month of decline.

Ford Motor Co. announced last week plans to cut around 800 roles in the UK by the end of 2027. Nissan, along with Ford and Stellantis, warned of the impact of the mandate to sell cars that are not produced at all, pointing to job cuts. And Jaguar has revealed the name change in anticipation of its widely heralded All-EV future.

Once famous around the world for producing brands such as Mini and Jaguar, the UK car industry has been in decline for years, with Brexit and high energy costs adding to its challenges. The country wants to be a leader in EVs but has left other countries behind in establishing the necessary plants and battery factories.

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Government intervention is needed to prevent UK car manufacturing from going out of business, said Andy Palmer, former chief executive of Aston Martin Global Lagonda Holdings Plc.

“Right now, there are a lot of reasons why you can’t make cars in the UK, starting with expensive power and maybe a lack of incentives,” said Palmer, who is chairman of EV charging company iPod Point Group Holdings Plc.

Focused on plugging what she says is a £22 billion ($28 billion) black hole in the UK’s finances, Chancellor of the Exchequer Rachel Reeves gave carmakers less in last month’s budget. Executives had hoped for additional tax cuts to boost sales of EVs, which remain more expensive than combustion engine alternatives.

That puts the onus on manufacturers to try to encourage consumers to buy EVs so they can comply with the UK’s mandate system. Under the target sliding scale, zero-emission cars should make up 22% of new cars sold this year, reaching 80% by 2030.

EV sales have risen in recent months as manufacturers cut prices to try to reach those levels, and the UK is ahead of most European markets, but this year’s 18% share is still short of the target. And many of those cars come from Chinese companies, which are scrambling to sell their affordable EVs in Britain as they face higher tariffs in the US and EU.

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After the latest round of heartbreaking news from the industry, automakers have stepped in to lobby for a simplification of the mandate system. Stellantis had already warned it that otherwise it might stop making cars in the UK. Business Secretary Jonathan Reynolds announced the review, prompting protests from some who say the system is working.

“If you change the ZEV mandate, it undermines investment from charging companies – people have made commitments based on this,” said Fiona Howarth, chief executive of Octopus Electric Vehicles, an EV leasing company.

The recent increase in demand shows that consumers will buy EVs if they are affordable, according to Erin Baker, director of planning at Auto Trader Group Plc, an online auto marketplace. “The discount proves that if the price is right, people want to switch,” he said.

Stellantis’ attempt to blame Luton’s planned closure on the authority has also raised doubts among EV supporters, given that the industry does not yet produce EVs and exports most of the vehicles it does. The company plans to shift production at its Ellesmere Port site near Liverpool, which makes electric minivans across its Vauxhall, Citroen, Peugeot, Opel and Fiat brands, following a £100 million investment million to turn it into an EV-only facility.

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“I think attaching potential job losses to the EV industry is wrong,” said Delvin Lane, CEO of EQT-owned fast-charging company InstaVolt Ltd.

Stellantis declined to comment.

It’s not just the UK where car manufacturers are struggling. As well as 800 cuts in the UK, Ford wants to eliminate around 2,900 positions in Germany and 300 elsewhere in Europe. Stellantis has been facing delays in introducing new models, product recalls and declining market share in the US and Europe. Volkswagen AG is weighing its first factory closure in Germany, and suppliers there are cutting thousands of positions.

Some UK factories have already closed. Honda Motor Co. closed its Swindon plant in 2021, ending decades of production in Europe.

The UK’s largest factory is operated by Nissan Motor Co. in Sunderland, northeast England, which can build up to 600,000 cars a year but will produce 325,000 by 2023. The Japanese carmaker pledged last year to invest £2 billion in Sunderland to boost EV production, including another battery plant. That followed announcements by Jaguar Land Rover owner Tata Motors Ltd. to build a £4 billion battery factory in Somerset and BMW AG’s decision to produce electric Mini models at its Oxford site.

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On Monday, Ford will start making electric drive units at its Halewood plant near Liverpool.

Industry officials are already considering how the ZEV changes might take. It could be what type of vehicle is counted in the percentage – certain hybrids, for example – rather than the percentage itself changing.

Stellantis is calling on the government to combine targets for passenger cars with those for commercial vans, which currently allow for slow EV adoption. It also wants battery electric car exports to be listed under the mandate, saying this would boost UK manufacturing.

Car manufacturers face fines of up to £15,000 per car if they fail to comply. Producers can avoid penalties by using a credit trading system and access to later years. That escape clause allowed EV players like Tesla Inc. and BYD Co. of China to obtain large sums from competitors who need to meet emission standards.

Back in Luton, staff are still hoping that Stellantis management will change their mind. On Thursday at the town hall, local MP Rachel Hopkins joined workers to organize their fight in what she described as an emotional meeting.

“It’s very painful for the city, and that’s why we have to fight to try to keep good skilled jobs,” Hopkins said. “We have a long history of manufacturing and producing cars in our city, it is very sad that that history may come to an end.”

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