Stellantis Seeks U.K. Aid for Factory Overhaul to Make EVs

Stellantis NV is reviewing options for its Ellesmere Port car factory in England including closing the plant if it can’t reach a deal with the U.K. government on new investments.

The automaker is considering revamping the factory that employs about 1,000 people for production of fully electric cars, according to a person familiar with the matter. The move would reflect the U.K.’s planned combustion-engine ban and its push to build up green industries.

For the overhaul to go through, Stellantis is seeking financial incentives and commitments on post-Brexit trade of auto parts, including batteries, said the person, who asked not to be named because the talks are private.

The plant making an Opel and Vauxhall model has emerged as an early test case for the U.K.’s carmaking prospects after the Brexit trade agreement reached in late December. Stellantis Chief Executive Officer Carlos Tavares froze spending due to uncertainty related to the country’s departure from the European Union. He also raised concerns last month about Brexit-related costs and bureaucracy, as well as Prime Minister Boris Johnson’s 2030 ban of cars powered by gasoline and diesel engines.

U.K. Support

Stellantis hopes to reach a binding agreement on Ellesmere Port with the U.K. in the near future, Michael Lohscheller, who heads the group’s Opel and Vauxhall unit, told Bloomberg News.

“At this stage these discussions are productive but not conclusive,” Lohscheller said. While a lack of government support may require closing the factory, the carmaker expects authorities to “behave in the interest of the U.K. economy,” he said.

Lohscheller declined to comment on future production plans for the factory. “We would disclose this in due time, but first we need the U.K. government support to make it happen,” he said.

High Stakes

Executives have met repeatedly with government and labor representatives in the past months to try to hammer out a deal that would keep Ellesmere Port running profitably once production of the current Astra model is phased out.

The political stakes are high for the plant not to become the first major post-Brexit industrial casualty. Johnson is under pressure to prove that the U.K.’s departure from the EU won’t spell the demise of local manufacturing. The factory is key for the region’s economy, with as many as 7,000 supply-chain workers depending on it for their livelihoods, the Unite union said.

“The Ellesmere Port plant is a major employer and winding it down would have devastating consequences,” Ed Miliband, the opposition Labour Party’s business spokesman, said Thursday in a statement. “The Government must not simply stand by, because doing so risks worsening the unemployment crisis.”

©2021 Bloomberg L.P.

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