Labour’s net-zero ambitions were in disarray last night after sales targets for electric cars were blamed for the closure of a major Vauxhall factory.

Downing Street said an urgent review of the targets would be launched in the coming weeks after repeated warnings from industry bosses that they were putting jobs and investment at risk.

Ministers are now expected to drastically water down the regime with the aim of speeding up sales of electric cars as part of the push to zero.

But the political shift came too late to stop the owner of Vauxhall announcing plans yesterday to close its van factory in Luton, putting around 1,100 jobs at risk.

Stellantis, which also owns brands including Citroen, Peugeot and Fiat, said it would combine its electric van production at its second UK plant in Ellesmere Port.

The regulations imposed to accelerate the transition to electric cars fueled the decision, the company said. Vauxhall vehicles have been manufactured at the Luton site for 120 years.

Local Labor MP Rachel Hopkins said the closure was ‘deeply worrying for our town’, adding: ‘Luton relies on these high quality manufacturing jobs to drive local growth and support national prosperity.’

The development throws Labour’s push to ban the sale of new petrol and diesel cars by 2030 into disarray, as sales targets were seen as key to achieving this.

Vauxhall parent Stellantis says it will close its Luton van factory (pictured) next year to consolidate production at its Ellesmere Port plant

Workers assemble the dashboards and steering wheels for Vauxhall Vivaro trucks on the production line at the Vauxhall factory in Luton

Ellesmere Port in Cheshire is already ready to produce electric vehicles. The move comes after Stellantis warned it may cut UK production in response to electric car sales targets

Tory MP Greg Smith said: ‘The government seems to have discovered there is such a thing as a market – and electric cars are proving very unpopular with real consumers.

“Now is the time to reflect on the best way to decarbonise cars and vans in a way that will take consumers with them.”

Tory peer Lord Frost added that Labour’s ‘crazy pursuit of net zero on an accelerated timetable will do real damage to the economy and the living standards of everyone in this country.’

Under existing EV sales rules, at least 22 percent of new cars sold by each manufacturer in the UK this year must have zero-emission capability. For vans, it is 10 per cent.

This is set to rise to 28 per cent next year and will rise every year over the next decade – reaching 80 per cent by 2030 and 100 per cent by 2035.

Currently, car and van manufacturers face fines of £15,000 per sold vehicle above targets.

The regime is designed to accelerate the move away from fossil fuel powered vehicles.

But several major industry players, including Ford, Nissan and Stellantis, have warned for weeks that it could have an ‘irreversible impact’ on UK car manufacturing by putting investment and thousands of jobs at risk.

Earlier this year, Stellanti chief executive Carlos Tavares warned that the future of both Luton and Ellesmere Port was in doubt.

In July, when Labor won the election, he announced a review of the future of both factories, citing the impact of the EV sales mandate.

Carmakers are already being forced to cut back due to plummeting sales of electric cars to private drivers and after Labor hiked employers’ National Insurance contributions in its £40 billion tax bomb budget last month.

Last night, government sources said a consultation on the EV sales targets, also known as the ‘ZEV mandate’, will be launched in the coming weeks.

Local Labor MP Rachel Hopkins (pictured) said the closure was ‘deeply worrying’

Research from This is Money suggests some of the biggest car companies and groups are falling short of battery electric sales targets

Business Secretary Jonathan Reynolds pictured leaving Downing Street earlier today. He said today was a ‘very difficult day for Luton’

They said that while the percentages for each year are likely to remain, fines could be drastically reduced from £15,000 to ease the burden on businesses.

Manufacturers may also be allowed to include exports and sales abroad within the targets.

Another option is to equalize the proportion of cars and vans included in the targets.

However, sources stressed that the separate target of banning the sale of new petrol and diesel cars by 2030 will remain in place.

Stellantis chose to make the announcement just hours before Business Secretary Jonathan Reynolds addressed industry leaders in central London last night, humiliating him ahead of the address.

At dinner in central London last night (TUES), Business Secretary Jonathan Reynolds confirmed a ‘fast-track’ review of sales targets for electric cars.

He added that ministers had ‘heard you loud and clear about the need for support to make this transition a success.’

Appearing before the Commons’ Business and Trade Committee earlier in the day, Mr. Reynolds to MPs: “A hearing will be announced in due course – on an accelerated timescale – allowing us to consider whether this policy is currently working as anyone expected it to?”

‘I don’t think it is, and I understand the seriousness and urgency of the situation.’

Stellantis’ move is the latest blow to the government’s plan to make Britain’s economy grow faster than any other G7 nation.

This week at the CBI conference it was accused of treating business as a ‘cash cow’ to be ‘milked’ with its National Insurance raid on firms.

It also comes after GDP growth fell to 0.1 per cent under Labour, down from 0.5 per cent under the previous Tory administration.

Labor has been more hard-line on net-zero targets than the previous Tory government.

While former prime minister Rishi Sunak said they would be achieved in a “proportionate and pragmatic way”, Labor has accelerated the ban on the sale of new petrol and diesel cars by bringing it forward to 2030 from 2035. It has also accelerated the phase-out of oil- and gas drilling in the North Sea and lifted the effective ban on onshore wind farms, sparking fears that thousands of turbines could destroy the landscape.

The Vauxhall Luton factory is just a mile from Luton Airport (pictured in 2002)

Transport Secretary Louise Haigh held crunch talks with carmakers last week about the electric car scheme amid concerns the targets were unrealistic

Figures from the Society of Motor Manufacturers and Traders (SMMT) showed fully electric cars made up 18 per cent of new car sales in the first 10 months of this year – below the target of 22 per cent by 2024.

A total of 116,000 fewer new electric cars and vans are also expected to be registered this year compared to expectations when the EV sales targets were announced under the previous Tory government.

A government spokesman said: ‘We have a long-standing partnership with Stellantis and we will continue to work closely with them, as well as unions and local partners on the next steps of their proposals.

“The Government is also supporting the wider industry with over £300m to promote the take-up of zero-emission vehicles and £2bn to support the transition to domestic manufacturing.”

SMMT chief executive Mike Hawes said: ‘We need a quick review of the car market and the regulation that drives it.

‘The industry is hurting; profitability and viability are at risk and jobs are at stake.’

The Unite union said the decision to close the Luton plant was “a complete slap in the face to our members in Luton, where Vauxhall vehicles have been manufactured for 120 years”.

“We are ready to support our members in doing what we can to ensure historic vehicle production is maintained in Luton and we call on the Government to do the same,” it added.