Struggling industry: An employee inspects a car at the Vauxhall vehicle production plant in Luton, England. EV sales have risen in recent months in the United Kingdom as manufacturers discount prices. — AP
LONDON: Tony Vitty hasn’t worked at the Vauxhall van plant in Luton, north of London, for years. And yet, the retired 74-year-old speaks about parent company Stellantis NV’s plans to shutter the site as if he were losing his own job.
“It’s devastating,” the former quality control manager said of the 1,100 workers now at risk.
“At least half of them have got mortgages, and there isn’t that kind of work around. It’s going to end up possibly being a ghost town.”
Vauxhall has been inextricably linked with Luton for 120 years, creating jobs and boosting the local economy – at its peak, it employed about 37,000 people in the town.
Local residents aren’t the only ones feeling the pain as the United Kingdom auto industry sinks further into crisis, with demand for petrol-powered vehicles falling and manufacturers struggling to meet the government’s ambitious targets for electric vehicle (EV) adoption.
UK car output slumped 15% in October, its eighth consecutive month of decline.
Ford Motor Co announced plans last week to eliminate around 800 roles in the United Kingdom by the end of 2027.
Nissan, along with Ford and Stellantis, warned about the impact of the zero-emission vehicle sales mandate, hinting at potential job cuts. And Jaguar unveiled a rebranding in anticipation of its all-EV future that was widely panned.
Once renowned globally 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 lagged other countries in establishing the necessary plants and battery factories.
Government intervention is needed to prevent auto manufacturing in the United Kingdom from ending altogether, said Andy Palmer, former chief executive officer (CEO) of Aston Martin Global Lagonda Holdings Plc.
“Currently, there are lots of reasons why you wouldn’t necessarily make cars in the United Kingdom, starting with expensive energy and perhaps a lack of incentives,” said Palmer, who chairs EV charging company Pod Point Group Holdings Plc.
Focused on plugging what she says is a £22bil (US$28bil) black hole in the United Kingdom’s finances, Chancellor of the Exchequer Rachel Reeves offered automakers little in last month’s budget.
Executives were hoping for a cut in value-added tax to boost sales of EVs, which remain pricier than combustion-engine alternatives.
That keeps the onus on manufacturers to try to encourage consumers to buy EVs so that they can comply with the United Kingdom’s mandate system.
Under a sliding scale of targets, zero-emission cars are supposed to make up 22% of new cars sold this year, reaching 80% in 2030.
EV sales have risen in recent months as manufacturers discount prices to try to reach those levels, and the United Kingdom is ahead of many European markets, but this year’s 18% share is still short of the target. And many of those cars are from Chinese brands, which are racing to sell their more affordable EVs in Britain as they face additional tariffs in the United States and European Union.
After the latest round of dire news from the sector, automakers stepped up lobbying for an easing of the mandate system.
Stellantis had already warned it otherwise might stop making vehicles in the United Kingdom. Business Secretary Jonathan Reynolds announced a review, prompting protests from some who say the system is working.
“If you change the EV mandate, it undermines the investment from charging companies – people have made commitments based on this,” said Fiona Howarth, CEO of Octopus Electric Vehicles, an EV leasing company.
The recent surge in demand shows consumers will buy EVs if they are affordable, according to Erin Baker, editorial director at Auto Trader Group Plc, an online car marketplace. “The discounting proves that if the price is right people want to make the switch,” she said.
Stellantis’s effort to pin the blame for the planned Luton shutdown on the mandate has also drawn scepticism from EV backers, given that the plant doesn’t yet produce EVs and exports most of the vehicles it makes.
The company plans to shift production to its Ellesmere Port site near Liverpool, which makes small electric vans across its Vauxhall, Citroen, Peugeot, Opel and Fiat brands, following a £100mil investment to turn it into an EV-only plant.
“I think to peg potential job losses of a transitioning industry on EVs is unfair,” said Delvin Lane, CEO of EQT-owned rapid charging firm InstaVolt Ltd.
Stellantis declined to comment. It’s not just the United Kingdom where carmakers are struggling. As well as the 800 UK cuts, Ford wants to eliminate about 2,900 positions in Germany and 300 elsewhere in Europe.
Stellantis has been grappling with delays in introducing new models, product recalls and shrinking market share in the United States and Europe. Volkswagen AG is weighing its first-ever factory closures in Germany, and suppliers there are eliminating thousands of positions. Other UK factories have already closed. Honda Motor Co shut its Swindon plant in 2021, ending decades of production in Europe.
The United Kingdom’s largest factory is operated by Nissan Motor Co in Sunderland, in northeast England, which is able build as many as 600,000 vehicles a year but only produced 325,000 in 2023.
The Japanese carmaker pledged last year to invest £2bil at Sunderland to ramp up EV production, including another battery factory.
That followed announcements by Jaguar Land Rover owner Tata Motors Ltd to build a £4bil battery plant in Somerset and BMW AG’s decision to manufacture electric Mini models at its Oxford site.
On Monday, Ford will start making electric drive units at its Halewood plant near Liverpool. Industry executives are now speculating on what form the changes to the ZEV mandate could take. It could be what type of vehicles count toward the percentages – certain hybrids, for example – rather than the percentages themselves changing.
Stellantis is calling for the government to merge the targets for passenger cars with those for commercial vans, which currently allow for slower EV adoption.
It also wants exported battery electric vehicles to count toward the mandate, arguing this would spur UK production.
Automakers face fines of as much as £15,000 per vehicle if they fail to comply. Manufacturers can avoid penalties by using a credits-trading programme and catch up in later years.
That escape clause has allowed EV players such as Tesla Inc and China’s BYD Co to rake in large sums from rivals that need to meet emissions standards.
Back in Luton, workers still hope that Stellantis executives will change their mind. Last Thursday at the town hall, local member of Parliament Rachel Hopkins joined workers to plan their fightback at what she described as an emotional meeting.
“It’s just heartbreaking for the town, so that’s why we’ve got to fight to try and maintain good skilled jobs,” Hopkins said. “We’ve got a long history of manufacturing and auto manufacturing in our town, it’s just devastating that that history could potentially come to an end.” — Bloomberg
