U.K. Dodges Brexit Auto Disaster as Vauxhall Plant Goes Electric

(Bloomberg) -- Stellantis NV will convert its lone U.K. car factory to make electric vans, ending months of anguish at an almost 60-year-old plant threatened by the economic fallout from Brexit.

The automaker will spend 100 million pounds ($138 million) retooling its Ellesmere Port plant near Liverpool, which employs roughly 1,000 people. Production of Vauxhall and Opel Astras will end early next year, and output of Vauxhall, Opel, Peugeot and Citroen vans will begin by the end of 2022.

Securing the future of the factory is a boon to local workers and the U.K. government, which has been trying to safeguard the nation's auto industry amid an accelerating shift to electric vehicles. It's the latest post-Brexit boost for Prime Minister Boris Johnson after Nissan Motor Co. last week announced plans to create a new 1 billion-pound EV and battery hub in northern England.

“It's a huge vote of confidence in our economy, in the people of Ellesmere Port and in our fantastic post-Brexit trading relationships,” Johnson said in a video message.

As part of the conversion, Stellantis will build a new body shop and on-site battery pack assembly. The carmaker formed from the merger of PSA Group and Fiat Chrysler will shrink how much of the site it uses to reduce inefficiencies and consider redeveloping excess land.

Then-owner PSA considered closing the plant in the wake of the U.K.'s 2016 referendum on whether the country should remain in the European Union. Carlos Tavares -- now the CEO of Stellantis -- warned that he would need to protect the company in the event of a no-deal Brexit and froze investment plans.

“This is a major boost for the plant, the workforce and the region,” said Mike Hawes, chief executive officer of the Society for Motor Manufacturers and Traders, the country's auto trade group. “Maintaining the U.K. as an attractive destination for investment is a constant process and government and industry must continue to work together to avoid unnecessary costs.”

Concerns Remain

While the Stellantis and Nissan announcements strengthen the prospects of post-Brexit manufacturing in the U.K., concerns remain that the country's auto industry will be left behind as the industry electrifies.

Brexit Muddles U.K.'s Move to Electric Cars: Hyperdrive Daily

Stellantis is committed to maintaining employment in Ellesmere Port today but won't make assurances on the future as staffing will depend on demand, Arnaud Deboeuf, the company's manufacturing chief, told reporters.

The carmaker will source battery cells from existing suppliers initially, then from its Automotive Cells Company venture with TotalEnergies SE from 2023. Stellantis doesn't have plans now to source any batteries from the U.K., though it might in the future, Deboeuf said.

Insufficient Investment

Carmakers aren't spending enough to upgrade their facilities in the U.K. for EVs, according to Transport & Environment. The nation will slump to producing just 4% of electric cars in Europe by 2030, from 50% three years ago, the Brussels-based researcher said in a report last month. Total car production in the U.K. is forecast to drop to 1 million vehicles, down about a quarter from pre-pandemic levels.

Still, the electric vans will help feed a key market segment. Year-to-date van registrations in the U.K. rose 1.8% compared with the pre-pandemic five-year average, even amid supply-chain issues, according to SMMT. Stellantis already makes commercial vans at a factory in Luton, England.

“Just a couple of years from now, your packages will be gliding silently to your door in an electric van marked ‘Made in Great Britain,'” Johnson said.