Stellantis will move some van output from Russia to Western Europe

PARIS – Stellantis will move some of its van production in Russia to Western Europe and freeze plans for more investments in the country as a consequence of the invasion of Ukraine, CEO Carlos Tavares said.

"New investments in Russia are not on the table," Tavares told reporters on Friday.

The automaker on Thursday suspended all exports and imports of vehicles with Russia, where it operates a vehicle plant in Kaluga plant in partnership with Mitsubishi.

The decision reverses a previous plan, announced in January, to use Russia as an export hub to meet strong van demand in Western Europe. Stellantis said then that it would export Peugeot, Opel and Citroen vans from Kaluga after van sales soared as home delivery services boomed during the coronavirus pandemic.

The Kaluga plant also builds the Outlander and Pajero models for Mitsubishi.

Tavares said Stellantis plants in Hordain, France, and Luton, England, could easily absorb the low volumes that were produced in Kaluga for export.

The Kaluga factory has an annual capacity of 125,000 and began building vans in 2017 for the former PSA Group, which merged with Fiat Chrysler Automobiles last year to form Stellantis.

Kaluga, about 180 km southwest of Moscow, has become a center of the Russian auto industry. Volkswagen Group opened an assembly plant there in 2007, as did Volvo trucks. Prominent suppliers in the area include Continental, Magna International and Visteon.

Tavares' announcement came after Moscow decided a ban on exports of certain goods, including vehicles, and agricultural commodities, as a retaliation measure against Western sanctions imposed over its invasion of Ukraine.

The Ukraine crisis is driving up the price of metals used in cars, from aluminum in the bodywork to palladium in catalytic converters to the high-grade nickel in electric-vehicle batteries, increasing pressure on the industry, already facing higher energy costs.

Tavares said further shortages of raw materials, including nickel for EV batteries were to be expected. "Stellantis has not been hurt so much so far as our supply base is not concentrated in Eastern Europe," he said.

Stellantis believes it can make up ground on electric vehicle pioneer Tesla in the coming years, Tavares said on Friday, adding that consumers would benefit from competition in the sector.

The automaker this month presented its first business plan, with an aim to double revenue to 300 billion euros ($330 billion) a year by 2030, stepping up efforts to expand its electrified vehicle models.

"I am very confident, I am trying not to be arrogant, just confident of the fact that we are going to catch up in the next couple of years with Tesla and it's going to be a very healthy competition," Tavares told reporters during a televised Q&A session with reporters organized by Mobility TV World.

Tavares also called for greater investment in charging networks in Europe and the United States, to create a "density" which he deems fundamental to persuade families to switch to relying on electric cars.

Automotive News Europe's Italy correspondent Andrea Malan contributed to this report