Coventry-based taxi and van maker invokes 'force majeure' clause on supplier contracts amid shutdown crisis, reports claim
23 April 2020

The London Electric Vehicle Company (LEVC) has warned suppliers that it will not be able to fulfill payments for a least a month, reports suggest.

A letter seen by Sky News was written by the Coventry-based electric taxi and van maker to its production partners earlier this month. It says the firm has invoked a 'force majeure' clause in its contract, increasing the difficulties automotive suppliers face during the coronavirus pandemic

LEVC, owned by Chinese giant Geely, told suppliers that "despite LEVC's implementation of measures to minimise the impact of the Covid-19 pandemic to maintain production and keep its offices and sites open, the situation has escalated beyond control."

It continued: "As a result, we will be unable to meet our obligations in relation to [your] agreement including, without limitation, our ability to: schedule future orders, process and receive supplies, permit access to our site, process payments; or otherwise continue to provide normal supplier support services."

The letter claimed the force majeure clause would remain until at least 1 May, although given it was sent earlier this month, that may be extended further. Responding to Autocar's request for comment, LEVC released a statement:

"The temporary suspension of manufacturing and adjustment to production schedules has resulted in a requirement to notify its production suppliers of a force majeure situation for a short period of time.  LEVC’s business plan for this year remains unchanged and the company is committed to a long term relationship with all of its business partners, and looks forward to returning to full production of the TX electric taxi as soon as possible.”

LEVC shut its manufacturing operations in Coventry on 26 March along with the majority of the industry, with no definite re-opening date. However, with factory restarts slowly commencing across Europe, some firms in the UK are preparing for a return to production. 

Vauxhall has begun preparations for a safe re-opening of its Ellesmere Port factory, although no date has been given. Nissan is also undergoing safety tests at its Sunderland plant, with a production restart expected in the coming weeks. 

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8

23 April 2020

You'd think the parent company would pay.  Afterall imagine if Vauhall refused to pay and PSA just shrugged (in a French fashion) their shoulders.

One for the lawers but morally it just sounds wrong.

23 April 2020

I agree (and I know someone who is a supplier of theirs...). Geely are behaving a bit like Branson here. 

FM8

23 April 2020
Maybe, but it's usual behaviour from an OEM to protect itself from any aggressive attempt from suppliers to force the terms of a contract. It's used quite a lot, particularly with tier 1 suppliers, it's only the current headlines that are making this news.

23 April 2020

 

You'd think the parent company would pay.  Afterall imagine if Vauhall refused to pay and PSA just shrugged (in a French fashion) their shoulders.

One for the lawers but morally it just sounds w

 

Just the "norm" for you, posting without thinking or knowledge of the facts behind the announcement. You have NO IDEA of the internal discussions/situations, so on exactly what basis in fact do you comment?. Fool...AS PER USUAL.

FM8

23 April 2020
FFS... You can't even copy and paste. What a tool.

23 April 2020

But probably following usual Geely business practices.

Almost everything is made in China because those businesses are completely ruthless in the pursuit of making money - but companies from outside of China moving their operations there are as much to blame. 

23 April 2020

It is somewhat irritating, however, that a company from the Country responsible for all this mess claims that it can't afford to pay their suppliers. I wouldn't have thought that things were so bad that Geely couldn't afford to help them out.

23 April 2020

you all think geely have an infinite amount of bailout money just lying around, to be able to bankroll their entire group for months without any income? if they bail out levc, the have to do everyone else as well. How much do you think volvo currently owes to suppliers? This isn't the same as Branson, he's a multi-billionaire, with a payroll that takes months to a run to a few million, and people were only talking about him covering his payrol, not the business outgoings. 

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