Is Stellantis's latest threat to axe UK plants credible?

Compared with the UK, both facilities should be much cheaper locations in which to build vans. Portugal, for example, has consistently the lowest wholesale energy prices in Europe, according to energy research group Ember. The UK’s high energy prices are among the biggest complaints of manufacturers operating here.

There’s no evidence that pulling out would harm sales. Ford’s decision to pull Transit production out of Southampton for Turkey in 2013 has had no effect on demand – the Transit Custom was by far the UK’s best-selling van in the UK in the first quarter, according to SMMT figures. 

“Van production in the UK is Stellantis. So if they decide this is not sustainable, that's it,” said Bailey. “We could be looking at a vanishing van industry.”

Recent history has shown, however, that faced with a credible threat, the UK government will generally give the vehicle makers what they want. Stellantis, for example, was ready to pull out of Ellesmere Port following the end of Astra production until the government stepped in with a reported £30m of the £100m retooling cost to make EVs. 

If Stellantis really wanted to divest itself of Ellesmere Port, that would have been the moment, one senior industry figure told Autocar. “If they wanted to leave, Brexit gave them the perfect opportunity,” they said on condition of anonymity.

Nissan has had perhaps the greatest success on that front, reportedly receiving “hundreds of millions” of government money towards the cost of the £2 billion investment pledge to shift production to electric vehicles at Sunderland after the company voiced a series of threats.

BMW, meanwhile, reportedly benefited from a £75m cash injection from the government towards the £600m investment cost to bring electric Mini production back to Oxford from 2026. BMW had been among those threatening to leave if Brexit made life too difficult for Mini.

Life is tougher for those luxury manufacturers whose long UK manufacturing history anchors their global brand, meaning they don’t have the same leverage. Bentley has privately grumbled that it got almost nothing from the UK government towards its £2.5bn investment announced in 2022 to build electric cars. Companies like Bentley have long argued for a more coherent and transparent industrial policy instead of the current hostage-style negotiations. 

Leaning on the government for more support is nothing new, but recent events has increased the frequency. “I think part of the reason why car makers see threats as the only way to get support is because we don't have an industrial policy after Boris Johnson scrapped it,” said Bailey.

The Conversative government has been particularly keen to hang onto car makers after Brexit threw up barriers they didn’t have before, further pushing up manufacturing costs in an already expensive country.

It might be time for the UK to focus its investment on high-value manufacturing instead, argues McLaren Automotive CEO Michael Leiters. “If we want to compete on the cost side and achieve cost leadership, we will fail,” Leiters told Autocar on the sidelines of the same SMMT event last week.

“It's not only about McLaren: many [UK car makers] including JLR have very clear positioning. They are succeeding due to great products. It's not low cost, it's high cost,” said Leiters.

McLaren argues that mandating a fast shift to electrification risks losing some of the premium technology leadership built up by the UK’s luxury makers, which has mainly focused around combustion engines and platforms that accommodate them.

Taking a longer route would enable UK investment in the next generation of high-performance electrification, including batteries. “We must harness the skills, knowledge and ingenuity of the UK motorsport and performance car industry to create a global, high-performance centre of excellence,” said Leiters.

Car makers like Stellantis and McLaren are making their pitch to Labour in the expectation that the party will form the next government following the election on 4 July. 

Labour has so far pledged to reinstate the ban on sales of new pure petrol and diesel cars from 2030 but Stellantis is obviously hoping the party’s traditional focus on keeping manufacturing jobs makes it susceptible to threats to move those abroad. All eyes will now be on the reaction of the new government.