(Bloomberg) -- Stellantis NV plans to close a van factory in Luton, England, in a rebuke of the government mandating more electric vehicle sales.
The owner of Vauxhall announced Tuesday that it intends to shift production of electric vans from the Luton site, which employs around 1,100 people, to its other UK van plant in Ellesmere Port. While Stellantis said it’s proposing the move in the context of the government’s “stringent” EV mandate, it’s also restructuring in several other markets as a result of its own financial woes.
Stellantis threatened pulling out of the UK entirely earlier this year, warning that the government’s EV objectives are too ambitious. The UK introduced rules requiring 10% of new van sales this year to be zero-emission, rising to 70% by the end of the decade. Passenger cars are subject to even tougher targets.
Automakers face fines of as much as £15,000 per vehicle if they fail to comply, though they can avoid penalties by using a credits-trading program and exceeding targets in later years. The targets for electric vans were eased after talks with manufacturers.
Stellantis said its plans for Luton are subject to consultation with employees and trade unions. It expects to transfer hundreds of jobs to Ellesmere Port and invest an additional £50 million ($63 million) there.
The company isn’t alone in shrinking output as EV demand wanes in Europe. In Germany, Volkswagen AG is pushing for unprecedented cuts at its namesake brand, including possibly closing three plants, laying off thousands of workers and cutting wages.
Stellantis makes small electric vans across its Vauxhall, Citroën, Peugeot, Opel and Fiat brands at Ellesmere Port, following a £100 million investment to turn the factory into an electric-only plant. The manufacturer’s former UK chief Maria Grazia Davino left last month to join Chinese rival BYD Co.
(Updates with industry cutbacks in fifth paragraph. A previous version of this story corrected the day of the week in the second paragraph.)
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