Labour‘s net-zero ambitions were in disarray last night after electric vehicle sales targets were blamed for the closure of a major Vauxhall factory.
Downing Street said an urgent review of the targets will be launched in the coming weeks after repeated warnings from industry chiefs that they were putting jobs and investment at risk.
Ministers are now expected to drastically water down the regime, aimed at accelerating EV sales as part of the push to net-zero.
But the policy shift came too late to stop the owner of Vauxhall announcing plans yesterday to close its van-making factory in Luton, putting about 1,100 jobs at risk.
Stellantis, which also owns brands including Citroen, Peugeot and Fiat, said it would combine its electric van production at its other UK plant in Ellesmere Port.
The rules imposed to accelerate the transition to EVs fuelled the decision, the firm said. Vauxhall vehicles have been made at the Luton site for 120 years.
Local Labour MP Rachel Hopkins said the closure was ‘deeply troubling for our town’, adding: ‘Luton depends on these high-quality manufacturing jobs to drive local growth and support national prosperity.’
The development plunges Labour’s push to ban new petrol and diesel cars sales by 2030 into chaos, as the sales targets were seen as a key for achieving this.
Vauxhall parent firm Stellantis says it will close its Luton van factory (pictured) next year to consolidate production at its Ellesmere Port plant
Employees assemble the dashboards and steering wheels for Vauxhall Vivaro trucks on the production line at the Vauxhall plant in Luton
Ellesmere Port in Cheshire is already primed to produce electric vehicles. The move comes after Stellantis warned it may cut UK production in response to EV sales targets
Tory MP Greg Smith said: ‘The Government appears to have discovered that there is such a thing as a market – and EVs are proving very unpopular with real consumers.
‘Now is a time to reflect on the best way to decarbonise cars and vans in a way that will take consumers with them.’
Tory peer Lord Frost added that Labour’s ‘crazy pursuit of net-zero on an accelerated timetable is going to do real damage to the economy and to the living standards of everyone in this country.’
Under existing EV sales rules, at least 22 per cent of new cars sold by every manufacturer in the UK this year must have zero-emission capability. For vans it is 10 per cent.
This is set to increase to 28 per cent next year and will rise each year over the next decade – reaching 80 per cent in 2030 and 100 per cent in 2035.
At present, car and van-makers will be slapped with fines of £15,000 per vehicle sold above the targets.
The regime is designed to accelerate the move away from fossil fuel-powered vehicles.
But several major industry players, including Ford, Nissan and Stellantis, have warned for weeks that it could have an ‘irreversible impact’ on UK car production by putting investment and thousands of jobs at risk.
Earlier this year, Stellantis chief executive Carlos Tavares warned that the future of both Luton and Ellesmere Port were in doubt.
In July, when Labour won the election, he announced a review of the future of both plants while citing the impact of the EV sales mandate.
Carmakers are already being forced to cut jobs because of plummeting sales of EVs to private motorists and after Labour hiked employer national insurance contributions in its £40billion tax-bomb Budget last month.
Last night Government sources said a consultation on the EV sales targets, also known as the ‘ZEV mandate’, will be launched in the coming weeks.
Local Labour MP Rachel Hopkins (pictured) said the closure was ‘deeply troubling’
Research by This is Money suggests some of the biggest car firms and groups are falling behind on targets for battery electric vehicle sales
Business Secretary Jonathan Reynolds pictured leaving Downing Street earlier today. He said today was a ‘very difficult day for Luton’
They said that while the percentages for each year will likely remain, fines could be drastically reduced from £15,000 to ease the burden on firms.
Manufacturers may also be allowed to include exports and sales abroad within the targets.
Another possibility is to equalise the proportion of cars and vans included in the targets.
However, sources stressed that the separate target of banning sales of new petrol and diesel cars by 2030 will remain in place.
Stellantis chose to make the announcement just hours before Business Secretary Jonathan Reynolds gave a speech to industry leaders in central London last night, humiliating him ahead of the address.
At the dinner in central London last night (TUES), Business Secretary Jonathan Reynolds confirmed a ‘fast-track’ review of EV sales targets.
He added that ministers had ‘heard you loud and clear on the need for support to make this transition a success.’
Appearing before the Commons’ Business and Trade Committee earlier in the day, Mr Reynolds told MPs: ‘There’ll be a consultation announced in due course – on an expedited timescale – that allows us to consider ‘is that policy currently operating as anyone expected it to?’
‘I don’t think it is and I get the seriousness and the urgency of the situation.’
Stellantis’s move is the latest blow to the Government’s plan to get Britain’s economy growing quicker than any other G7 nation.
This week it was accused at the CBI conference of treating business like a ‘cash cow’ to be ‘milked’ with its National Insurance raid on firms.
It also comes after GDP growth slowed to 0.1 per cent under Labour, down from 0.5 per cent under the previous Tory administration.
Labour has been more hardline with net-zero targets than the previous Tory government.
Whereas former Prime Minister Rishi Sunak said they would be achieved in a ‘proportionate and pragmatic way‘, Labour has accelerated the ban on sales of new petrol and diesel cars by bringing it forward to 2030 from 2035. It has also accelerated the phasing out of oil and gas drilling in the North Sea and lifted the effective ban on onshore wind farms, sparking fears that thousands of turbines could blight the countryside.
The Vauxhall Luton plant is located just one mile from Luton Airport (pictured in 2002)
Transport Secretary Louise Haigh held crunch talks with car makers last week on the electric vehicle scheme amid concerns the targets were unrealistic
Figures from the Society of Motor Manufacturers and Traders (SMMT) showed fully electric cars made up 18 per cent of new car sales in the first 10 months of this year – below the 22 per cent target for 2024.
A total of 116,000 fewer new electric cars and vans are also expected to be registered this year compared with expectations when the EV sales targets were announced under the previous Tory government.
A government spokesperson said: ‘We have a longstanding partnership with Stellantis and we will continue to work closely with them, as well as trade unions and local partners on the next steps of their proposals.
‘The government is also backing the wider industry with over £300m to drive uptake of zero-emission vehicles and £2bn to support the transition of domestic manufacturing.’
SMMT Chief Executive Mike Hawes said: ‘We need an urgent review of the automotive market and the regulation intended to drive it.
‘The industry is hurting; profitability and viability are in jeopardy and jobs are on the line.’
Trade union Unite said the decision to close the Luton plant was ‘a complete slap in face for our members in Luton, where Vauxhall vehicles have been manufactured for 120 years‘.
‘We stand ready to support our members in doing whatever we can to ensure that historical vehicle manufacturing is maintained in Luton and we call on the government to do the same,’ it added.