Vauxhall has confirmed it will be investing £50m in its UK site, but has warned that its future is "currently unsustainable".
The vehicle manufacturer will be bolstering its site in Ellesmere Port, Cheshire.
A new assembly line is planned to build electric Vauxhall Vivaros and other midsize zero-emission vans from next year.
However, parent company Stellantis has said that the factory will not be commercially viable if government ministers do not change current policy on electric vehicles.
Why is Vauxhall's factory at Ellesmere Port 'unsustainable'?
The Ellesmere Port factory used to produce the Vauxhall Astra and now makes 14,500 small electric vans a year, according to The Times.
Emanuele Cappellano, the head of the Stellantis European region, has said that targets under the zero-emission vehicle (ZEV) mandate need to be addressed.
He shared: “Operating in the UK is currently unsustainable under the regulations and there is an urgency for that to be addressed."
Currently, the mandate demands that 24% of light commercial vehicle manufacturers’ sales are electric.
There is an £18,000 fine for every van sold that does not conform to that threshold.
Additionally, the target is to have 70% of new vans sold in the UK as electric by 2030.
Stellantis has argued that the mandate means it has to produce an excessive number of zero-emission commercial vehicles or limit the number of diesel vans sold to avoid penalties.
Long-term profitability at the site, which produces zero-emission versions of the Vauxhall Combo, Citroën Berlingo, Peugeot Partner and Fiat Doblo, remains uncertain.
The plant, which has a workforce of 950, also manufactured 30,000 bodyshells last year for export to a Stellantis plant in Algeria.
Stellantis closed Vauxhall's Luton plant in 2025 to move its electric van production to Ellesmere Port.
A spokesperson at the time said: "Our employees always remain our priority, and we continue to act responsibly towards our colleagues in Luton."
However, Unite's general secretary Sharon Graham said: "Stellantis's betrayal of its Luton workforce, who have delivered every target asked of them, is a total disgrace."
Is the electric van market in the UK growing?
While the UK electric van market is growing, industry figures show that electric vehicles have made up less than 12% of van sales so far this year.
The Times reports that business secretary Peter Kyle is in favour of relaxing the mandate in both annual target volumes and the rate of implementation.
However, this is said to be at odds with Ed Miliband’s Department for Energy Security and Net Zero and the Treasury.
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