Vauxhall owner Stellantis will announce as early as Tuesday that it plans to make electric vans at its Ellesmere Port factory in the UK, safeguarding the future of the plant, according to three people briefed on the plans.

Stellantis, the newly merged Fiat Chrysler and PSA, has decided to invest a sum in the low hundreds of millions of pounds at the site to manufacture electric vans, which are in growing demand thanks to the booming home delivery market, the people added.

The move by Stellantis follows Nissan’s decision this week to build a new electric model at its Sunderland car plant alongside the UK’s first large-scale battery factory in a £1bn project with Envision AESC.

Business secretary Kwasi Kwarteng told the Financial Times on Thursday that Nissan’s investment would create a “domino effect” among other potential battery groups or auto investors looking to locate work in the UK.

The UK government’s decision to ban the sale of petrol and diesel vehicle sales by 2030 has left the country’s car industry racing to establish the infrastructure to build electric cars at scale.

The move prompted Stellantis to ditch plans to build the next Vauxhall Astra car at Ellesmere Port and instead examine electric vehicle options for the site in north-west England.

While the company has car facilities in Europe with ample capacity, it has more limited van production. Its UK plant in Luton, which makes diesel vans, is running at full capacity.

An electric van will be a lifesaver for Ellesmere Port, which has shed hundreds of jobs over recent years as demand for the Astra model has waned. The Astra is also built in a more efficient facility in Poland.

The decision to locate electric van production at Ellesmere Port follows months of talks with the UK government over financial support, which the carmaker required before making a final decision.

A spokesman for Stellantis declined to comment.

Plans to make an electric van at the site were first reported by Automotive News Europe.

While the company is targeting an announcement on Tuesday, the only uncertainty is whether the relevant executives and politicians can be assembled at the plant, the people added. If it is not announced on Tuesday, the date may slip by a number of weeks, the people said.

Stellantis will hold a major battery day next week to outline its strategy for the transition from combustion engines to electric ones. The company has a deal with French energy giant Total to create battery factories in France, Germany and another undisclosed European location.

However, the third site will not be in the UK, head of the joint battery group Yann Vincent told the FT earlier this week, saying it would be in continental Europe. An official confirmation is expected next week.

While Stellantis may potentially source batteries from providers outside its Total partnership, it means those for the Ellesmere Port vans are likely to be imported.

Governments across Europe are competing to attract battery factory investment in order to protect their car industries as they increasingly shift to making electric vehicles.

The UK government has set up a £500m fund to woo battery investors, and is offering around £100m of support to the Nissan project, according to sources.

The industry has warned that the sum will need to rise to attract enough projects to maintain the current network of UK plants. The trade body estimated that plants with 60GWh of capacity are needed just to keep the current factories.

Additional reporting by Anna Gross in Lille

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