Vauxhall owner to invest £100m to build electric vehicles at Ellesmere Port

Vauxhall owner Stellantis has announced that it will invest £100m to build electric cars and vans at Ellesmere Port, in Cheshire, in a move that will make it the first large plant in the UK dedicated exclusively to electric vehicles.

It will build four electric vans and their passenger car equivalents at the UK factory under Stellantis’s Vauxhall, Opel, Peugeot and Citroën brands, replacing the Astra family car which will be built in Germany instead.

The decision, backed by a reported £30m in taxpayer subsidies, will secure the jobs of 1,000 workers at Ellesmere Port as well as an estimated 3,000 in the supply chain.

The investment will be welcomed across the UK car industry, which has suffered from years of uncertainty over foreign owners’ investment plans since the Brexit vote in 2016. It is the second significant investment into the UK car industry in a week, after Nissan said it would pour £1bn into electric car and battery production in Sunderland.

The UK-EU trade deal that came into force at the start of the year has allowed companies to put in place longer-term plans to invest in new electric technology, despite the ongoing production difficulties caused by the coronavirus pandemic.

Stellantis will install new equipment to assemble battery packs at Ellesmere Port. However, the plant will source the cells that make up batteries from EU plants owned by ACC, a joint venture between Stellantis and French oil company Total.

British-made vehicles with batteries sourced from the UK or EU will not face export tariffs when sold in European markets under the Brexit deal, meaning Stellantis can rely on continental factories to produce its batteries rather than having to invest in a UK facility.

The Vauxhall Combo-e, Citroën e-Berlingo and Peugeot e-Rifter at the Vauxhall factory in Ellesmere Port. Photograph: Phil Noble/Reuters

Stellantis said it would consider sourcing from the UK in future if so-called gigafactories – large battery factories – are established.

The future of Ellesmere Port has been in the balance for years as its owners waited for the outcome of Brexit negotiations. Stellantis, formed this year in a merger of Peugeot and Fiat, held extended talks over state aid after its chief executive, Carlos Tavares, said in January that Ellesmere Port was threatened by the UK government’s “brutal” decision to ban internal combustion engine sales after 2035.

Stellantis declined to reveal the size of government subsidies it had secured. The Financial Times reported that the subsidies were worth £30m.

Paul Willcox, Vauxhall’s managing director, said the investment was on a “knife edge” before securing government support, and that it was “never a given”.

“If we hadn’t got the government support I doubt we would be sitting here today with a positive announcement,” he said. “Having clarity on the trading conditions in Europe was very important as well.”

Tavares said the investment “demonstrates our commitment to the UK and to Ellesmere Port”. He said: “Since 1903 Vauxhall has manufactured vehicles in Britain and we will continue to do so.”

Ellesmere Port may also have benefited from a decision by the EU to force Stellantis to produce more vans for Japanese rival Toyota to address competition concerns that came up in its merger, according to Ian Henry, the managing director of AutoAnalysis, a consultancy.

The investment was greeted beyond the car industry. Kwasi Kwarteng, the business secretary, said it was “a clear vote of confidence in the UK as one of the best locations globally for competitive, high-quality automotive production.”

Ed Miliband, the shadow business secretary, said it was a “huge relief”, but he added that the government should increase its direct investment in a UK battery supply chain.

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The models produced in Ellesmere Port will be the Vauxhall and Opel Combo-e and Combo-e Life, the Peugeot e-Partner and e-Rifter, and the Citroën e-Berlingo car and van models. Willcox declined to say how many cars will be built at the plant. It has a capacity of 181,000 cars a year, but only produced 63,000 cars in 2019 before the pandemic, according to Marklines, an automotive data company.

The pandemic is still causing carmakers including Stellantis significant problems, including a global shortage of computer chips. Vauxhall plants at Ellesmere Port and Luton have not been forced to shut down, although Luton has been unable to move from two to three shifts because of the issues.

Jaguar Land Rover, the UK’s biggest carmaker, has been heavily affected. On Tuesday it said its deliveries to car dealers would be half of previous plans because of the chip shortages, which will worsen over the summer before improving.