Vauxhall owner Stellantis has announced that it will invest £ 100m in building electric cars and vans in Ellesmere Port, Cheshire, making it the UK's first major vehicle-only factory.
It will build four electric vans and their car equivalents under the Vauxhall, Opel, Peugeot and Citroën brands by Stellantis at the British plant, replacing the Astra family car, which is instead being built in Germany.
The move, backed by £ 30 million tax subsidies, will secure jobs for 1,000 workers in Ellesmere Port as well as around 3,000 in the supply chain.
The investment is welcomed in the UK auto industry, which has suffered from years of uncertainty about foreign owners' investment plans since the 2016 Brexit vote. Would pay £ 1 billion to produce electric cars and batteries in Sunderland.
The UK-EU trade agreement, which came into force earlier this year, has allowed companies to make longer-term plans to invest in new electrical technologies despite ongoing production difficulties due to the coronavirus pandemic.
Stellantis will install new equipment to assemble the battery packs in the port of Ellesmere. However, the plant will source the cells that make up the batteries from European plants owned by ACC, a joint venture between Stellantis and French oil company Total.
UK-made vehicles with batteries from the UK or EU are not subject to export duties when sold in European markets under the Brexit Agreement, which means Stellantis can rely on factories on the mainland to manufacture its batteries rather than investing in the UK need establishment.
Stellantis said it would consider sourcing from the UK in the future if so-called gigafactories - large battery factories - were set up.
Ellesmere Port's future has been at stake for years as the owners await the outcome of the Brexit negotiations. Stellantis, formed from a merger of Peugeot and Fiat earlier this year, had lengthy state aid talks after its chairman Carlos Tavares said in January that Ellesmere Port was threatened by the government's "brutal" decision to sell internal combustion engines Prohibited in 2035.
Stellantis declined to disclose the amount of government grants received. The Financial Times reported that the grants totaled £ 30 million.
Paul Willcox, managing director of Vauxhall, said the investment was "on the knife edge" before it received government support and "can never be taken for granted".
"If we hadn't got government support, I doubt we'd sit here today with a positive announcement," he said. “It was also very important to have clarity about trading conditions in Europe. "
Tavares said the investment "shows our commitment to the UK and the port of Ellesmere". He said: "Vauxhall has been making vehicles in the UK since 1903 and we will continue to do so."
Ellesmere Port may also have benefited from an EU decision to force Stellantis to produce more vans for its Japanese rival Toyota in an effort to address competition concerns raised during the merger, according to Ian Henry, managing director of AutoAnalysis, a consulting firm.
The investment was praised beyond the automotive industry. Economy Minister Kwasi Kwarteng said it was "a clear vote of confidence in the UK as one of the best locations in the world for competitive, high-quality automobile production".
Ed Miliband, the shadow economy secretary, said it was a "great relief" but added that the government should increase direct investment in a UK battery supply chain.
The Vauxhall and Opel Combo-e and Combo-e Life, Peugeot e-Partner and e-Rifter as well as Citroën e-Berlingo car and van models are produced in Ellesmere Port. Willcox didn't want to say how many cars are being built at the plant. It has a capacity of 181,000 cars per year, but according to Märklin it only produced 63,000 cars in 2019 before the pandemic