Stellantis threatens to stop U.K. production over EV sales mandate

LONDON -- Stellantis could halt its U.K. production unless the British government does more to stimulate demand for battery-electric vehicles to help it comply with new EV mandates, the automaker's top U.K. executive said.

A decision on the future of the company's U.K. production would likely come in less than a year, said Maria Grazia Davino, managing director Stellantis U.K.

Britain has introduced rules requiring that 22 percent of each manufacturer's new car sales be zero-emission this year, rising to 80 percent in 2030. For vans, 70 percent of new sales have to be electric by then. 

According to data from industry association SMMT, full-electric cars made up 16.1 percent of sales through to May.

With demand for EVs slowing, Davino said Stellantis would be forced to make discounts to meet the targets to avoid fines of as much as £15,000 ($19,022) per vehicle for those failing to comply.

"There will be consequences (of the mandates) for sure," Davino said at the SMMT International Automotive Summit in London on Tuesday. "Stellantis U.K. does not stop, but Stellantis production in the U.K. could stop," she said.

There are still U.K. tax incentives in place for corporate fleets to buy EVs, but there are no subsidies for consumers to buy EVs that are more expensive than ICE equivalents.

Rather than pay fines, Stellantis may import fewer ICE models into the U.K. to curtail sales and hit the 22 percent target, Davino said.

Ford has also said it will restrict sales of combustion-engine vehicles in the U.K. rather than push EV sales to meet the mandate.

Like other automakers, Stellantis wants Britain to provide tax incentives for consumers and to boost charging infrastructure, and for the company's U.K. EV production to count towards its targets, even though some of it is exported.

Stellantis builds full-electric vans for its Vauxhall, Citroen, Peugeot, Opel and Fiat brands at its Ellesmere Port factory near Liverpool and has said it will start making electric vans at its Luton plant in 2025.

The U.K.'s goals on EV sales come as consumer demand has slowed in recent months amid persistently high prices and patchy charging infrastructure. Davino said the rising targets through 2030 "could be very damaging."

"If demand does not follow the offer then we will be forced to take decisions — because we manage profit and loss, we manage operational decisions — that are impacting the U.K.," she said.

Asked how long Stellantis — the U.K.’s best-selling van manufacturer — could continue without changes to the regime, she said: “Less than a year.”

"Let me be clear, I want to keep the production in the U.K.," she said.

Stellantis sold almost 216,000 new cars in the U.K. last year, accounting for about 11 percent of the total market, including more than 100,000 under the Vauxhall nameplate.

Davino's comments come as the U.K. heads for a general election on July 4 with both the incumbent Conservative Party as well as the Labour Party set to stick with current electric sales targets.

Bloomberg contributed to this report