Stellantis could axe UK production unless government acts on EVs

FILE PHOTO: Signage saying ‘Electrifying Britain’ is seen on the outside of the Stellantis owned Vauxhall car factory in Ellesmere Port, Britain, September 20, 2023. REUTERS/Phil Noble/File Photo

By Nick Carey

LONDON (Reuters) - Stellantis could halt its UK production unless the government does more to boost demand for electric vehicles (EVs) to help it comply with regulations requiring automakers to sell more EVs, the company's top UK executive said on Tuesday.

Speaking at a news conference held by industry group the Society of Motor Manufacturers and Traders (SMMT) in London, Maria Grazia Davino told reporters that a decision on the future of the company's UK production would likely come in "less than a year".

Grazia Davino's remarks come a little over a week before Britons go to the polls to elect a new government.

Unlike the European Union, where automakers can meet CO2 emissions reduction targets by selling a mixture of hybrids and EVs, Britain is demanding from this year that automakers sell a minimum percentage of fully electric cars or face fines of 15,000 pounds ($19,033) per non-compliant vehicle sold.

FILE PHOTO: The logo of Stellantis is seen outside a company building in Chartres-de-Bretagne near Rennes, France, March 11, 2024. REUTERS/Stephane Mahe/File Photo

"In the UK there will be consequences (of the mandates) for sure," Grazia Davino said. "Stellantis UK does not stop, but Stellantis production in the UK could stop."

This year, the UK government has ruled that 22% of all new cars sold must be EVs. According to SMMT data, fully electric cars only made up 16.1% of sales through to May.

There are still UK 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 fossil-fuel equivalents.

Rather than pay fines, Stellantis - home to brands including Peugeot, Fiat, Vauxhall and Jeep - may import fewer fossil-fuel models into the UK to curtail sales and hit the 22% target, Grazia Davino said.

"The fact is that demand is not there," she said.

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

Stellantis currently makes electric vans at its Ellesmere Port plant in northwest England, and has previously said it would start making electric vans at its Luton plant in southern England in 2025.

"Let me be clear, I want to keep the production in the UK," Grazia Davino said.

($1 = 0.7881 pounds)

(Reporting by Giulio Piovaccari and Nick Carey; Editing by Jan Harvey and Mark Potter)