Vauxhall owner Stellantis has announced plans to close its van manufacturing plant in Luton, placing 1,100 jobs at risk.
The Dutch carmaker said it would instead consolidate electric van production at Ellesmere Port in Cheshire with a £50m investment.
It comes following reports the UK government will water down plans to fine automakers based on the number of zero-emission vehicles they sell.
Business secretary Jonathan Reynolds is expected to announce a consultation on the rules at an industry dinner on Tuesday evening, following intense lobbying from a number of British carmakers.
Carmakers have voiced concern over slowing demand from private consumers, although the industry’s figures for take-up, provided by the Society of Motor Manufacturers and Traders (SMMT), are disputed by some experts.
Stellantis warned in June it may be forced to stop production in the UK should demand for electric vehicles (EVs) not increase.
Companies House accounts show that prior to Tuesday’s announcement, Vauxhall had already cut its employee count from 1,488 to 1,283 in the latest financial year, even as profit rose and turnover reached over £2.5bn.
Vauxhall owner to invest in Cheshire plant
In a statement, Stellantis said it remains “committed to acting responsibly toward its employees in Luton and, subject to approval, would offer relocation and support to facilitate” staff wishing to transfer to Ellesmere Port.
The firm reiterated its commitment to “remain the UK market leader” in electric light commercial vehicles (LCVs). Its Vauxhall plant in Luton currently builds petrol and diesel vans, but was set to begin production of the Vivaro Electric model before 2025.
A government spokesperson said: “While it’s encouraging to see Stellantis investing in the future of its Ellesmere Port plant, we know this will be a concerning time for the families of employees at Luton who may be affected.
“We have a longstanding partnership with Stellantis and we will continue to work closely with them, as well as trade unions and local partners on the next steps of their proposals.
“The government is also backing the wider industry with over £300m to drive uptake of zero emission vehicles and £2bn to support the transition of domestic manufacturing.”