Future of Vauxhall’s Ellesmere Port factory remains uncertain

Vauxhall parent group Stellantis are reviewing options for keeping open its Ellesmere Port car factory in Cheshire, with the possibility of closing the plant if a deal on financial incentives cannot be reached with the government.

The company is considering manufacturing electric vehicles (EVs) at Ellesmrere Port, but says that it requires incentives, including financial aid for future EV battery manufacturing, and commitments on the post-Brexit trade of automotive components such as batteries.

More than 1,000 people work at the site and many more in its supply chain.

Last month, Vauxhall’s parent company PSA Peugeot merged with Fiat Chrysler to create the fourth largest automaker in a deal worth £50bn. The merger aims to achieve lower costs through higher volumes and combined efforts on developing new technologies for EVs and autonomous vehicles. The process of integration, however, will take several years.

Stellantis CEO Carlos Tavares has warned that governments could “create situations which destroy the business model” by introducing restrictions without sufficient time for companies to adapt, citing the UK’s 2030 ban on new sales of cars with internal combustion engines (brought forward from 2035).

“If we are told that in 2030 internal combustion engines cannot be sold in the UK – which we respect as a decision from the country – then we are not going to invest in internal combustion engines anymore because that makes no sense,” he said.

The best possible outcome for the Ellesmore Port facility would be a transition to manufacturing a new generation of EVs at the site, although this is an expensive process with many complicating factors. Other possibilities include continuing to manufacture cars with internal combustion engines in the short term before winding down production, or winding down the plant without restarting production.

Analysts believe that the government will need to invest heavily in domestic manufacturing of EV batteries, with the establishment of large-scale production facilities in the style of Tesla’s 'Gigafactories'. Union officials estimate the UK will require at least seven such plants to support the transition to EVs. Support for these plants may be addressed by Chancellor Rishi Sunak’s budget speech next week.

The transition to manufacturing EVs would also be likely to be complicated by Brexit; under the terms of the Brexit trade deal, it is theoretically possible for batteries manufactured in the EU to be installed in vehicles assembled in the UK for export back to the EU (the larger market). However, industry experts warn that this is not so simple in practice given that the batteries cannot be transported through the Channel Tunnel for safety reasons.

“Unite will fight any attempt to close the car plant with everything at its disposal,” said the Unite convener for the plant, John Cooper. “The long-term future of the Vauxhall plant is essential to the success of the entire North-West economy. Up to 7,000 workers in the supply chain rely on the plant for their livelihoods.

“It would be entirely unforgivable if the government failed to provide every possible assistance and support in securing the future of this critical plant.”

Talks have been underway between Stellaris, the local authority, and the government; Business Secretary Kwasi Kwarteng has met with Stellaris three times in the past six weeks. A board meeting ended yesterday with no final agreement on how to go ahead, although an announcement may be imminent. Vauxhall boss Michael Lohscheller told Bloomberg News that the talks had been “productive but not conclusive”.

A government spokesperson said: “We are committed to ensuring the UK continues to be one of the best locations in the world for automotive manufacturing, and we’re doing all we can to protect and create jobs, while securing a competitive future for the sector.”

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