Vauxhall owner to make decision on future of UK plants ‘in next few weeks’

The owner of the Vauxhall, Citroën and Peugeot brands has said a decision will be made on the future of its UK plants “in the next few weeks”, amid a row over government electric vehicle quotas.

Carlos Tavares, the outgoing chief executive of Stellantis, has said the company is nearing a decision on the future of Ellesmere Port and Luton.

The company said in June that it could be forced to close the plants if government rules were not relaxed.

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Tavares said Stellantis would make a “correction” to its UK business in the coming weeks in response to the damage the government’s zero-emissions vehicle mandate had done to profitability.

Carmakers have been ramping up pressure for government subsidies for EV sales amid a race to comply with the mandate. The initiative is aimed at managing the phase-out of new petrol and diesel car sales, and the switch to EVs, over the next six years.

“We are now reaching a point where we have to make a decision, and that will happen in the next few weeks,” he said.

Tavares said the company had discussed with officials for several months how the UK government could “help to stimulate demand”, Bloomberg reported.

Tavares also said the EU’s decision to slap extra tariffs on Chinese EVs would speed up car giants’ plant closures in Europe as Chinese and European motoring bosses went head to head at the Paris motor show.

With countries including Hungary and Spain vying to attract Chinese investment to make Chinese vehicles locally, Tavares said the countries that would suffer most from the new duties were the traditional powerhouses of the car sector including Germany, France and Italy.

Tariffs were a “good communication tool” but had side effects, argued the boss of the car group, which also owns the Fiat, Jeep and Chrysler brands.

He said putting levies on imported cars would encourage China to set up its own factories on the continent, putting existing car companies at risk.

“The way to avoid custom duties [by China] is to build in Europe,” Tavares said. “You are accelerating the need to shut down plants” elsewhere in Europe, he added, underlining another risk to traditional carmakers in Germany, Italy and elsewhere.

Tavares cited the case of the Chinese EV giant BYD, which is building its first European assembly plant in Hungary. “Chinese carmakers will not go to Germany or France or Italy to build their cars, because they would have cost disadvantages there, starting from energy costs,” he said.

The EU is proposing extra tariffs of up to 35% on Chinese EVs despite opposition from states including Germany which fears its joint ventures in China will be hit.

In retaliation, China imposed its own tariffs on EU brandy hitting French companies such as Rémy Cointreau and Hennessy.

Both sides continue to talk but sources say there is little chance of a settlement before the deadline of 30 October for China to come back with a solution.

The BYD vice-president, Stella Li, used the Paris car show to criticise the EU tariffs, but at the same time said the company planned to make almost all the cars it sells in Europe on the continent. Such a move would avoid tariffs but also spell danger for rivals such as troubled Volkswagen .

“Politicians should stay away from tariffs, adding more cost to auto manufacturing and confusing the auto industry,” said Li.

Speaking alongside the European Commission president, Ursula von der Leyen, in Berlin, the German chancellor, Olaf Scholz, expressed hope of reaching an agreement by the end of October.

If no agreement is struck by 30 October then tariffs can be collected from 31 October. After that, there is still potential for a pause, manufacturer by manufacturer or sector-wide, something China is pushing for.

Both Tavares and Martin Sander, the sales chief of Volkswagen passenger cars said prolonging the transition to EVs was dangerous.

“Making a transition for longer is a big trap,” Tavares told the Financial Times. “When you make a longer transition, in fact, you don’t replace the old world by the new one. You add up the new world to the old.”

The next five to 10 years are considered make or break for some of Europe’s biggest car manufacturers, with the EU already trying to limit the damage from competition from China with the proposed imposition of tariffs in November of up to 45% on EV imports.

Several manufacturers have already scrapped their original plans to phase out the traditional internal combustion engine as they battle to meet a 2035 ban on new vehicles equipped with one.