Stellantis to invest £100m in electric van production at Ellesmere Port

Stellantis will manufacture electric vans at its Ellesmere Port plant with a £100m investment that safeguards the Cheshire factory, following a UK government financing deal.

The carmaker, formed by this year’s merger of Peugeot and Vauxhall owner PSA and Fiat Chrysler, will make electric versions of the Vauxhall and Opel Combo vans at the facility, as well as the Citroën Berlingo and the Peugeot Partner.

However, the group will shrink the size of the plant initially and import batteries for the vehicles, although it is open to buying from UK plants in future as its sales increase, according to people briefed on its plans.

After months of talks described as “intense”, ministers agreed to about £30m of financial support for the Stellantis investment, people briefed on the discussions said.

It is the second major UK electric vehicle investment to be announced in a week, after Nissan’s £1bn project to make an electric model and battery plant in Sunderland, and comes as the government tries to drum up investment into battery production in the UK.

“This £100m investment demonstrates our commitment to the UK and to Ellesmere Port,” said Stellantis boss Carlos Tavares. “Producing battery electric vehicles here will support clean, safe and affordable mobility for the citizens. Since 1903 Vauxhall has manufactured vehicles in Britain and we will continue to do so.”

Business secretary Kwasi Kwarteng called the investment “a clear vote of confidence in the UK as one of the best locations globally for competitive, high-quality automotive production”.

While Stellantis needs more van capacity to meet increased demand from the boom in home deliveries, the company is also required to increase factory space as a condition of the €50bn merger between PSA and FCA that was finalised in January.

To assuage concerns that a merged group would dominate the highly profitable European van segment, Stellantis agreed to produce more vans on behalf of Toyota, which has a commercial vehicle partnership with PSA.

The factory that makes Toyota models in France is at full capacity, so the refreshed facility at Ellesmere Port means PSA models in France can give way to Japanese vehicles, it is understood. It is not clear whether Stellantis will make electric Toyota models in the UK.

The Stellantis decision saves the plant, which suffered from dwindling sales and risked following Honda’s car factory in Swindon and Ford’s Bridgend engine plant, which have both closed.

At its peak, Ellesmere Port employed 12,000 workers. Its current workforce is about 1,000 after shifts were cut back in recent years and staff laid off.

Staff were told at a briefing on Tuesday that the manufacturing space at the site would be reduced by 64 per cent due to efficiency improvements, according to a person familiar with the details.

Ellesmere Port is one of the most export-exposed plants in the UK, sending roughly 80 per cent of its Astra models to Europe, while dependent on imported components for more than three-quarters of its parts.