Labour‘s net-zero plans were in chaos last night after electric car sales targets were blamed for the closure of a Vauxhall factory.
Downing Street said an urgent review of the policy will be launched in the coming weeks after repeated warnings that it was putting jobs and investment at risk.
Ministers are now expected to drastically water down the plans, aimed at accelerating EV sales in the push to net-zero.
But the shift came too late to stop the owner of Vauxhall announcing plans to close its van-making factory in Luton yesterday, putting around 1,100 jobs at risk.
Stellantis, which also owns Citroen, Peugeot and Fiat, said it would combine its electric van production at its other plant in Ellesmere Port.
The firm said Labour’s eco policy fuelled the decision.
Stellantis made the announcement just hours before Business Secretary Jonathan Reynolds gave a speech to industry leaders in central London last night, where he admitted he was ‘profoundly concerned’ by how the EV sales mandate was working in practice.
He said the Vauxhall closure ‘only confirms what we knew about the scale of the challenges’ facing the industry.
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
Meanwhile Society of Motor Manufacturers and Traders (SMMT) boss Mike Hawes warned the sales target could cost the industry nearly £6billion this year alone, adding: ‘Jobs are on the line.’
Rachel Hopkins, Labour MP for Luton South, 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.’
Labour’s plans to ban new petrol and diesel cars sales by 2030 are now in chaos – as the sales targets were seen as key.
Under existing EV sales rules, at least 22 per cent of new cars sold by manufacturers 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 – to 80 per cent in 2030 and 100 per cent in 2035.
While the 2030 ban will mean firms cannot sell pure fossil fuel cars, they will be able to continue selling hybrids until 2035.
At present, car and van-makers will be slapped with fines of £15,000 per vehicle sold above the targets.
Figures from the SMMT showed fully electric cars made up 18 per cent of new sales in the first ten months of this year – below the 22 per cent target for 2024.
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’
Last night Tory peer Lord Frost warned 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.’
Tory MP Greg Smith added: ‘The Government appears to have discovered there is such a thing as a market – and EVs are proving very unpopular with real consumers.’
It comes after major industry players, including Ford, Nissan and Stellantis, warned for weeks that the rules could have an ‘irreversible impact’ on UK car production.
Earlier this year, Stellantis boss Carlos Tavares warned the future of both Luton – which has been making vehicles for 120 years – and Ellesmere Port were in doubt.
When Labour entered No 10 in July he announced a review of the future of both plants while citing the impact of the EV sales mandate. Car-makers 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 Budget.
Last night government sources said a consultation on the sales targets, also known as the ‘ZEV mandate’, will be launched.
They said that while the percentage hikes for each year are likely to remain, fines could be drastically reduced from £15,000.
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.
At the event last night, Mr Reynolds confirmed a ‘fast-track’ review of EV sales targets, adding that ministers ‘heard you loud and clear on the need for support to make this transition a success’.
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
It is the latest blow to Labour’s plan to grow Britain’s economy. This week it was accused at the CBI conference of treating business like a ‘cash cow’ to be ‘milked’ with its NI raid.
A government spokesman said: ‘We have a longstanding partnership with Stellantis and will continue to work closely with them as well as trade unions and local partners on the next steps.’
