The former trade minister had the most popular appeal among both Tory membership and the wider population of the last three candidates standing.
Instead Rishi Sunak or Liz Truss will make their case to members over the next six weeks — and then to the British public when one of them is announced as prime minister on September 5.
In a last-minute bid to stay in the race, Ms Mordaunt’s team sent a message to all MPs that showed a poll putting her ahead of the remaining pair in being able to win the next general election, but it failed to convince.
At precisely 4pm, Sir Graham Brady, chairman of the 1922 Committee that oversees Conservative affairs, walked into the cavernous Committee Room 14, where all results from the five previous ballots have been announced.
In a room packed with Conservative MPs, he read the outcome in alphabetical order, announcing Ms Truss’s 113 votes last. She beat Ms Mordaunt by eight votes. Immediately there were expletives from a number of Tories. One muttered: “This is perfect for Labour,” and a Ms Mordaunt supporter stated that “the only winner of Rishi versus Liz is Labour”.
Mr Sunak, who won 137 votes, does have a Yorkshire constituency but his vast personal wealth, along with his immensely rich India-born wife, is unlikely to convince Red Wall voters in northern England.
Being Boris Johnson’s chancellor will also provide the opposition with significant ammunition, as will the Conservative leadership debates that ended in unedifying mud-slinging between candidates.
Ms Truss is keen on steep tax cuts at a time of high inflation, with questions over her ability to steer the economy out of the mire caused by the pandemic and cost-of-living crisis.
She is also not a natural orator — as her rather wooden debate performances demonstrated — and is likely to be easily outshone by Labour leader Sir Keir Starmer during Prime Minister’s Questions.
“If the party was thinking straight, they would have put Penny Mordaunt on the last two,” said one political observer. “She was the only one that was a clean break from the Boris regime who would have nationwide electoral appeal. She was the high-risk, high-reward candidate.”
It is understood that Mr Johnson’s favoured choice for successor is the Foreign Secretary Ms Truss and early in the campaign she was overshadowed by Ms Mordaunt’s sudden surge in the polls.
But Ms Mordaunt’s campaign was then hamstrung by a series of high-level leaks to Conservative-supporting newspapers that attacked her on transgender rights, as well as her time as a Cabinet minister.
On the leadership trail - in pictures
Those leaks are now being investigated by the Cabinet Secretary Sir Simon Case, but that probe was announced after MPs were finishing voting.
Shortly before the vote announcement, a Ms Mordaunt MP supporter sent a text that suggested Ms Truss’ campaign team were behind the personal attacks. “I fear Liz has pushed us out,” he wrote. “The nasty personal attacks cut through.”
Nicola Richards, the MP for West Bromwich East who was backing Ms Mordaunt, said shortly after she had voted: “Penny is the only one who can win us the Red Walls seats. Having seen Penny’s sensible approach in the leadership campaign, that was how she would have governed the country. She has great appeal across the UK."
Michael Fabricant, another Ms Mordaunt supporter, agreed that she had “the best chance of winning the next general election”. He also told The National: “She is very business-like, very conscientious and has real appeal among the electorate."
With Mr Sunak some distance behind Ms Truss in opinion polls of the 160,000 Tory members, he is now expected to make a series of high-level policy announcements. Realistically he has only two weeks in which to make an impression as the first postal ballot papers drop through letterboxes from August 1.
His biggest moment to cut through and make a forceful impression will come when the BBC hosts the first — and possibly only — televised debate between the pair on Monday evening.