Unlock the Editor’s Digest for free

Vauxhall owner Stellantis will begin making its range of mid-size electric vans in the UK for the first time from next year, in the latest example of UK automakers “reshoring” production.

The carmaker plans to start a “limited” run of battery vehicles predominantly for the domestic market at its plant in Luton, it said on Thursday.

Stellantis will invest about £10mn initially to upgrade the existing diesel production line, but a full conversion of the factory to electric vehicles will depend on the outcome of talks with ministers over state support to help fund the transition.

“Whilst this decision demonstrates Stellantis’ confidence in the plant, this first step in its redevelopment 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,” said Maria Grazia Davino, head of Stellantis UK.

Nusrat Ghani, industry and economic security minister, welcomed the announcement: “This is a further vote of confidence in the UK economy and exciting news that shows our plan for the auto industry is working.

Stellantis secured about £30mn of state support in 2021 as part of a £100mn investment to transform its other UK factory at Ellesmere Port to EV production. The plant in north-west England makes smaller electric vans.

Ministers have pledged hundreds of millions of pounds of state support to international carmakers in recent years for an array of projects, including a battery gigafactory for JLR and new electric models from Nissan and BMW.

The Luton plant, which employs about 1,500 people, made just over 90,000 combustion engine vans last year. The new EV models — Vauxhall/Opel Vivaro Electric, Peugeot E-Expert, Citroën ë-Dispatch and Fiat Professional E-Scudo — are expected to account for about a tenth of the site’s output initially.

The company is Europe’s largest van maker and accounts for about half the UK electric van market. But it currently imports all mid-sized electric vans for the UK market from France.

Stellantis, the owner of multiple car brands including Opel, Peugeot, Citroën and Fiat, previously said it would look to localise UK production if Brexit led to tariffs between Britain and the EU.

In a deal agreed last year, tariffs will be applied to EV exports between the UK and EU from 2027 unless they contain high levels of locally sourced parts.

The company is planning to shift to an all-electric line-up of cars by 2030 in Europe, followed by vans at some point over the following decade.

Demand for electric vans is increasing, with business owners attracted to the lower running costs of EVs, compared with combustion-engine models. Ford has released an electric Transit, while Mercedes-Benz has a battery version of its Vito van.

Stellantis’ announcement is the latest boost to UK carmaking after securing £24bn of new investment pledges from companies including BMW and JLR last year, more than the combined total for the previous seven years.

Source link