Expert comment: Stellantis’ Luton factory closure

“The zero emissions vehicle (ZEV) mandate is having an impact on automotive manufacturers manufacturing here in the UK and is forcing them into a strategic review of their business model, focussing on their manufacturing footprint.

“The news from Stellantis to close its Luton factory is a result of the company’s strategic review and the ZEV impact on its business model. This year, UK automotive manufacturers have been mandated to increase electric vehicle (EV) sales to 22% of their total UK new car sales, if they do not, they receive a £15,000 penalty for every combustion-engine car sold over. Subsequently, along with the October budget that significantly impacted business in general, this was the last straw for Stellantis. This follows Ford last week, which also announced to cut 800 UK jobs.

“Other UK automotive manufacturers may soon be reviewing their manufacturing footprint as the UK ZEV mandate becomes more of a hindrance than help for strategic growth. We must consider that UK automotive manufacturers are predominantly multinational with considerable capacity elsewhere and can relocate, leaving behind empty factories.

“Growth in demand for new electric cars has flatlined. In 2023 EV’s sales peaked, however the market share did not increase. In real terms, 16.5% of new EVs were sold in 2023 compared to 16.6% in 2022, with the full year figures not yet out for 2024. This was the first time EVs failed to increase their market share since 2018. The UK government phased out incentives to buy EVs in 2022 and all that remains is the 12 months zero vehicle excise duty. However, this is soon to be reviewed to be fairer for drivers with combustible engines. Also, to add to this, the cost of electricity has become more expensive.

“An EV is still considered a new technology by many consumers, and it is still more expensive to buy than a combustible engine vehicle. Whilst the range has been increasing, one of the main concerns potential customers share centres on charging away from home.

“UK government figures indicate just before the current government came into power, there were a little over 64.6K public charging devices available in the UK. Of which only 19% represented the desired quick chargers that many consumers who charge away from home would prefer to have available.

“While ChargePoint numbers are increasing, this needs to accelerate further to align support with the ZEV mandate for manufacturer’s targets, which will also support consumer confidence to buy into the market since there is no longer as much incentive to buy an EV.”