Stellantis threatens to end UK production over poor EV incentives

Stellantis could stop producing vehicles in the UK within a year, if the Government doesn’t take action to stimulate demand for electric vehicles (EV).

Speaking at a Society of Motor Manufacturers and Traders (SMMT) conference in London, Stellantis UK head Maria Grazia Davino said the business will evaluate alternative locations for production if the UK market becomes “hostile”.

The UK's ZEV mandate aims to accelerate the transition from petrol and diesel cars to electric models by 2035, with EV sales targets progressively increasing. EV car sales targets for this year have been set at 22% rising to 28% next year to reach 80% by 2030, failing which car makers will face fines of £15,000 for each non-compliant vehicle sold.

"In the UK, there will certainly be consequences due to these mandates," said Davino. "Stellantis UK will not halt its operations, but UK production could come to a stop."

Earlier this year, Stellantis chief executive Carlos Tavares branded Britain's EV policy as "terrible", warning that it could ultimately lead to carmakers facing bankruptcy.

Tavares said the UK's quota system had been set at levels “double the natural demand of the market”, forcing carmakers to sell vehicles at a loss in order to avoid heavy fines, jeopardising financial stability.

Tavares then warned: "To survive, companies have to stay in the black. I will not sell cars at a loss", adding that the net zero measures could mean it ceases offering some models and even scale back its presence in Britain.

The car and van maker has already made a significant investment in Vauxhall’s Ellesmere Port plant, which builds electric versions of the group’s small van.

Its Luton plant is set to produce the fully electric Vauxhall Vivaro Electric, Opel Vivaro Electric, Peugeot E-Expert, Citroen e-Dispatch and Fiat Professional E-Scudo in both right and left-hand drive from 2025.

ManMohan Sodhi, professor of Operations and Supply Chain Management at Bayes Business School (formerly Cass), said: “This present situation is another consequence of Brexit, with UK regulation not only different but also much more restrictive than the EU’s and without consideration of the end goal of emissions reduction. 

“The EU and the UK have imposed regulations on automakers for CO2 emissions reduction targets. However, there is a stark contrast in their approaches. Manufacturers can meet the requirements in the EU by selling a mixture of hybrids and EVs, a more flexible approach.

“On the other hand, the UK's approach is more stringent, requiring the sale of a minimum percentage of fully electric cars or facing fines of £15,000 per non-compliant vehicle sold. 

“Range anxiety, poor charging infrastructure, and the price of electric cars have meant the demand for fully electric vehicles has slowed down in the UK — as elsewhere — so many auto manufacturers not only face huge penalties starting this year, with these penalties growing rapidly annually till 2030 when the percentage of electric cars to be sold in the UK should be 80%. 

“On the other hand, the demand for hybrid cars has taken off, so meeting EU requirements is quite easy for manufacturers.

“There is no point making electric cars or vans that can’t be sold, so the UK would have to offer massive subsidies to reluctant end consumers.”