Labour's net-zero plans left in disarray after factory closure
by DAVID CHURCHILL CHIEF POLITICAL CORRESPONDENT · Mail OnlineLabour's net-zero plans were in chaos last night after electric car sales targets were blamed for the closure of a Vauxhall factory.
Downing Street said an urgent review of the policy will be launched in the coming weeks after repeated warnings that it was putting jobs and investment at risk.
Ministers are now expected to drastically water down the plans, aimed at accelerating EV sales in the push to net-zero.
But the shift came too late to stop the owner of Vauxhall announcing plans to close its van-making factory in Luton yesterday, putting around 1,100 jobs at risk.
Stellantis, which also owns Citroen, Peugeot and Fiat, said it would combine its electric van production at its other plant in Ellesmere Port.
The firm said Labour’s eco policy fuelled the decision.
Stellantis made the announcement just hours before Business Secretary Jonathan Reynolds gave a speech to industry leaders in central London last night, where he admitted he was ‘profoundly concerned’ by how the EV sales mandate was working in practice.
He said the Vauxhall closure ‘only confirms what we knew about the scale of the challenges’ facing the industry.
Meanwhile Society of Motor Manufacturers and Traders (SMMT) boss Mike Hawes warned the sales target could cost the industry nearly £6billion this year alone.
Some £2billion will be fines that are expected for car makers who failed to hit this year's zero-emission vehicle sales share, while the remaining £4billion is from discounting EV prices in an effort to stimulate sales.
Speaking at the trade body's annual dinner on Tuesday evening, Hawes told an audience: ‘Jobs are on the line.’
Rachel Hopkins, Labour MP for Luton South, said the closure was ‘deeply troubling for our town’, adding: ‘Luton depends on these high-quality manufacturing jobs to drive local growth and support national prosperity.’
Labour’s plans to ban new petrol and diesel cars sales by 2030 are now in chaos – as the sales targets were seen as key.
Read More
Car makers slash new EV prices by up to a THIRD in desperate bid to meet binding end-of-year sales targets
Under existing EV sales rules, at least 22 per cent of new cars sold by manufacturers in the UK this year must have zero-emission capability. For vans it is 10 per cent.
This is set to increase to 28 per cent next year and will rise each year over the next decade – to 80 per cent in 2030 and 100 per cent in 2035.
While the 2030 ban will mean firms cannot sell pure fossil fuel cars, they will be able to continue selling hybrids until 2035.
At present, car and van-makers will be slapped with fines of £15,000 per vehicle sold above the targets.
Figures from the SMMT showed fully electric cars made up 18 per cent of new sales in the first ten months of this year – below the 22 per cent target for 2024.
Last night Tory peer Lord Frost warned Labour’s ‘crazy pursuit of net-zero on an accelerated timetable is going to do real damage to the economy and to the living standards of everyone in this country.’
What is the zero-emission vehicle (ZEV) mandate?
Passed into law under Rishi Sunak's Conservative government, the zero-emission vehicle (ZEV) mandate requires manufacturers to increase the share of zero emission cars they sell each year.
Given there are almost no hydrogen fuel cell vehicles sold in Britain today, this primarily means an increase in battery electric car sales.
But car makers say the time limit is arbitrary and have called for longer to work towards the goal of zero-emission vehicles.
They face a fine of £15,000 per non-compliant car and £18,000 per non-compliant van sold outside the goal.
The targets for ZEV car sales are:
- 2024: 22 per cent
- 2025: 28 per cent
- 2026: 33 per cent
- 2027: 38 per cent
- 2028: 52 per cent
- 2029: 66 per cent
- 2030: 80 per cent
As of July, electric vehicle sales made up around 16.8 per cent of all new car sales in the UK in 2024. Labour has hinted it may reinstate a 100 per cent target for 2030.
Tory MP Greg Smith added: ‘The Government appears to have discovered there is such a thing as a market – and EVs are proving very unpopular with real consumers.’
It comes after major industry players, including Ford, Nissan and Stellantis, warned for weeks that the rules could have an ‘irreversible impact’ on UK car production.
Earlier this year, Stellantis boss Carlos Tavares warned the future of both Luton – which has been making vehicles for 120 years – and Ellesmere Port were in doubt.
When Labour entered No 10 in July he announced a review of the future of both plants while citing the impact of the EV sales mandate. Car-makers are already being forced to cut jobs because of plummeting sales of EVs to private motorists and after Labour hiked employer National Insurance contributions in its Budget.
Last night government sources said a consultation on the sales targets, also known as the ‘ZEV mandate’, will be launched.
They said that while the percentage hikes for each year are likely to remain, fines could be drastically reduced from £15,000.
Manufacturers may also be allowed to include exports and sales abroad within the targets. Another possibility is to equalise the proportion of cars and vans included in the targets.
However, sources stressed that the separate target of banning sales of new petrol and diesel cars by 2030 will remain in place.
At the event last night, Mr Reynolds confirmed a ‘fast-track’ review of EV sales targets, adding that ministers ‘heard you loud and clear on the need for support to make this transition a success’.
It is the latest blow to Labour’s plan to grow Britain’s economy. This week it was accused at the CBI conference of treating business like a ‘cash cow’ to be ‘milked’ with its NI raid.
A government spokesman said: ‘We have a longstanding partnership with Stellantis and will continue to work closely with them as well as trade unions and local partners on the next steps.’