The owners of Vauxhall are reviewing options for the Ellesmere Port car factory, including closing the site if a deal cannot be reached with the Government.

It is understood the company is considering making electric cars at the Cheshire factory.

It is believed parent group Stellantis is seeking financial incentives to produce a fully electric vehicle at Ellesmere Port, along with commitments on the post-Brexit trade of auto parts including batteries.

Speculation has been mounting since Vauxhall’s French parent company, PSA, merged with Fiat Chrysler to form a new automotive superpower last month, fuelled by the forthcoming ban on new petrol and diesel cars.

Business Secretary Kwasi Kwarteng has been involved in talks with the company.

Stellantis chief executive Carlos Tavares has warned governments can “create situations which destroy the business model”, telling a press conference: “If we are told that in 2030 internal combustion engines cannot be sold in the UK – which we respect as a decision from the country – then we are not going to invest in internal combustion engines anymore because that makes no sense.”

Analysts believe any decision will illustrate if the Government is serious about battery power, and green technology, which needs money investing in giga plants for batteries.

Union officials believe the UK needs at least seven battery plants to cope with the increasing switch to the technology.

The best case for the UK motor industry would be a decision to make a new generation of electric cars at Ellesmere Port.

John Cooper, the Unite convener at the Ellesmere Port plant, said: “Unite will fight any attempt to close the car plant with everything at its disposal.

“The long-term future of the Vauxhall plant is essential to the success of the entire North West economy. Up to 7,000 workers in the supply chain rely on the plant for their livelihoods.

“It would be entirely unforgiveable if the Government failed to provide every possible assistance and support in securing the future of this critical plant.”