Vauxhall owner risks exclusion from Labour electric car scheme

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2 days ago

The owner of Vauxhall risks being excluded from Labour's electric vehicle (EV) grant scheme over its reliance on Polish factories.
Stellantis, which owns brands including Peugeot, Citroën and Fiat, is among several car manufacturers scrambling to demonstrate their eco-credentials in a bid to qualify for new government subsidies.
But it is understood some of the company's cars may miss out on £3,750 grants offered by ministers because they are made in Poland and risk falling foul of net zero rules.
Under the scheme, vehicles put forward by manufacturers will be scored based on how green their production processes are. Those with the highest scores risk being excluded or only receiving a smaller payment of £1,500.
Carmakers must also prove they are signed up to 'science-based targets' to cut their carbon emissions, in line with net zero targets.
Ministers have already warned that Chinese-made cars are likely to be blocked from receiving grants for these reasons. China is the world's biggest carbon dioxide emitter, largely because of its huge consumption of coal for power generation.
But car industry insiders have warned the scheme's rules may also create a headache for Western manufacturers with operations in Poland because of the European country's similarly high dependence on coal.
Like China, roughly 60pc of Poland's electricity is generated by burning the fuel. Both countries generate about 7.5 tonnes of carbon dioxide per capita overall, according to the International Energy Agency.
The Government's grant scheme will assess carmakers on where they assemble EVs as well as where their EV batteries are produced. A 30pc weighting will be given to the former and a 70pc weighting to the latter, according to a briefing seen by The Telegraph.
It means some carmakers – including Stellantis – may be penalised for their dependence on Poland, which has attracted huge investment from the car industry and is also Europe's biggest supplier of batteries.
Electric models made by Stellantis at its plant in Tychy, in southern Poland, include the Jeep Avenger, Fiat 600e, Alfa Romeo Junior Elettrica and the Abarth 600e.
Until earlier this year, the company also made the Leapmotor T03 there through a joint venture.
It is not clear where Stellantis sources batteries for the cars made in Tychy but in addition to using its own battery joint venture in France, the company is understood to rely on a supplier based in China as well.
Several other major car companies also rely on China for supplies, as well as on an LG Energy Solutions plant based in Wrocław, Poland, which is Europe's biggest battery factory.
Ginny Buckley, chief executive of Electrifying.com, an electric car advice service, said: 'Poland may be Europe's EV battery powerhouse – second only to China globally – but its coal-heavy energy mix could mean its batteries will be excluded from the new electric car grants, as under the Government's strict environmental criteria only EVs with low-carbon supply chains qualify.
'It's a move that risks punishing carmakers working to establish European supply chains and limiting consumer choice.'
Uncertainty about whether certain cars will qualify for Britain's EV grant scheme has prompted complaints from car industry executives, who say it has made it harder to plan their marketing strategies for August and September.
Mike Hawes, chief executive of the Society for Motor Manufacturers and Traders, warned this week that manufacturers had been left trying to peer through 'a fog'.
Meanwhile, Chinese manufacturers such as BYD have already started slashing their UK car prices, in a defensive measure to compensate for their exclusion.
Dan Caesar, chief executive of campaign group Electric Vehicles UK, said: 'Some [carmakers] know that they're unlikely to be eligible and are proactively discounting ahead of time, while those that are applying will not be able to act as immediately.'
A Whitehall source acknowledged the grant scheme rules could block some cars made by Western manufacturers but cautioned that officials could not say for certain until manufacturers applied to join the scheme.
'We want as many models as possible to qualify for these grants, but the scheme has been intentionally designed to incentivise the greenest possible manufacturing,' they said. 'There will be ways that companies that manufacture in different places, and through different means, can work with us to ensure they are still included.'
A Stellantis spokesman said: 'Stellantis welcomes the Government's support to increase the sales of more affordable electric vehicles.
'This is something that we have been asking for. We are making the necessary grant applications for customers of our electric vehicles and are confident that a wide range of these, manufactured in our plants in the UK and Western Europe, will be eligible.'
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