Stellantis to Shut Luton Van Factory Amid EV Transition Challenges, Putting 1,100 Jobs at Risk

Stellantis, the automotive giant behind brands such as Vauxhall, Citroën, Peugeot, and Fiat, has announced its decision to shut down its Luton van-making factory in spring 2024. The closure threatens 1,100 jobs and marks a significant setback for the town’s industrial heritage. The plant, which has been operational since 1905, was slated to produce electric versions of its Vivaro vans starting in 2025.

The decision comes as Stellantis consolidates its UK operations, shifting electric van production to its Ellesmere Port facility in Cheshire, which is set to receive a £50 million investment. The move aims to centralize EV production to achieve greater efficiency, though conventional van production will move to France.

Union Backlash and Worker Concerns

The announcement has drawn sharp criticism from Unite, the trade union representing the Luton plant’s workers. Describing the decision as a “complete slap in the face,” Unite has vowed to fight for the future of vehicle manufacturing in Luton. “Whatever the benefits for Ellesmere Port, this decision is simply not acceptable,” the union said.

Stellantis has promised relocation support for Luton employees willing to transfer to Cheshire, where hundreds of new permanent jobs are expected to be created. However, the union has argued that such measures fall short of safeguarding Luton’s historic role in UK automotive manufacturing.

The Zero-Emission Vehicle Mandate Under Scrutiny

The closure highlights growing tensions over the UK’s zero-emission vehicle (ZEV) mandate, which requires carmakers to meet strict EV sales quotas. Currently, manufacturers must ensure that EVs account for 22% of car sales and 10% of van sales in 2024. Failure to meet these targets incurs a fine of £15,000 per non-compliant vehicle.

Stellantis and other industry leaders have warned that weak consumer demand for EVs, coupled with high raw material costs and interest rates, has made meeting these quotas increasingly difficult. The Society of Motor Manufacturers and Traders (SMMT) estimates that fulfilling these requirements could cost carmakers £6 billion in 2024 alone.

Government to Review EV Sales Rules

In response to the mounting pressure, Business Secretary Jonathan Reynolds announced plans to consult on adjustments to the ZEV mandate, acknowledging that it “is not working as intended.” While reaffirming the government’s commitment to phasing out petrol and diesel vehicles by 2030, Reynolds admitted the closure of the Luton plant marked a “difficult day for Luton.”

The SMMT has called for urgent government intervention to provide support packages and incentives to make EVs more affordable for consumers. While EV sales have grown—accounting for one in five cars sold in October—many argue this has been driven by unsustainable discounting.

Implications for the UK Automotive Industry

Stellantis’s decision has reignited concerns about the broader viability of the UK’s automotive sector. Rival manufacturers, including Nissan and Ford, have also raised alarms over the ZEV mandate. Nissan has cautioned that the rules undermine the business case for manufacturing in the UK, while Ford recently announced plans to cut 800 UK jobs, citing weaker EV demand.

As the UK transitions to electric mobility, the government faces increasing pressure to balance environmental goals with industry needs. Mike Hawes, chief executive of the SMMT, emphasized the importance of “workable regulation backed with incentives” to ensure a sustainable transition.

For Luton, the plant’s closure marks the end of an era, leaving uncertainty for its workforce and the region’s economic future.