Stellantis has revealed that it could halt electric vehicle (EV) production in the United Kingdom if the government doesn’t take steps to increase EV demand in the country. According to Stellantis boss Maria Grazia Davino, the way the UK government is handling the transition to electric cars is risking its business in the region.
Stellantis owns several popular auto brands including Citroën, Peugeot, Vauxhall, Opel, Maserati, Dodge, Chrysler, Jeep, Fiat and Alfa Romeo. With major markets such as the UK, European Union and the United States pledging to cut road emissions, Stellantis is working to electrify its vehicle lineups and remain compliant with increasingly strict emission standards. However, the company’s top executives say that the UK government’s handling of the EV transition may prompt Stellantis to stop producing electric vehicles in the UK.
Davino said the company would decide whether to shut down its Luton and Ellesmere Port plants in “less than a year.” She said that Stellantis UK would remain operational even if Stellantis decides to halt EV production in the country. The UK’s initial target date for banning new internal-combustion-engine (ICE) vehicle sales was 2030, but the government extended the deadline by five years to give UK drivers more time to transition to electric cars.
The UK prime minister noted at the time that electric vehicles still had exceedingly high upfront costs. European automakers in the UK have been tussling with the government to figure out the future of the country’s electric vehicle industry, especially now that Chinese companies have begun exporting cheaper electric cars into the UK, making it even harder for local carmakers to compete. Stellantis currently manufactures electric vans at the plant in Ellesmere Port, and it plans to begin developing electric cars at the Luton plant next year.
However, Davino says that if the market “becomes hostile” to Stellantis, it would consider manufacturing EVs elsewhere despite the substantial investments it had made in Luton and Ellesmere. With more affordable Chinese imports streaming into the UK, carmakers such as Stellantis have no choice but to cut their prices at the cost of profitability if they wish to remain competitive. Additionally, with electric vehicle demand in the country waning, Davino says offering discounts in a declining market would have notable business consequences for the company.
Electric vehicle demand has fallen in most markets over the past several months. Fewer people are willing to pay the premium required to own an electric car, and rising living costs coupled with high interest rates have made it costly to acquire EVs via debt. Major automakers such as Ford and General Motors have scaled back their ambitious electrification plans in response.
If Stellantis stopped making EVs in the UK, it could lose some of the advantages it has over other competitors in the industry such as NIO Inc. (NYSE: NIO), and that would add a new twist to the rivalry between different manufacturers looking to make inroads into the UK market.
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