Stellantis Warns of Potential UK Factory Closures Over Electric-Car Subsidies

Stellantis Warns of Potential UK Factory Closures Over Electric-Car Subsidies
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UK car production surged ahead in January, as revealed by the latest data from the Society of Motor Manufacturers and Traders (SMMT).

The head of Stellantis UK, Maria Grazia Davino, has issued a stark warning that the automotive giant may cease production at its Luton and Ellesmere Port factories unless the UK government provides financial and tax incentives to boost demand for electric vehicles.

Davino also called for a reduction in the stringent zero-emission vehicle quotas currently mandated for manufacturers.

Speaking at the UK’s Society of Motor Manufacturers and Traders annual summit in London, Davino highlighted the dire consequences for the UK electric vehicle market if government support is not forthcoming: “In the UK there will be consequences. Stellantis UK does not stop, but Stellantis production in the UK could stop.”

The potential closure of these factories, which employ 2,500 people in Cheshire and Bedfordshire, would end over a century of vehicle production in the UK under the Vauxhall brand. Stellantis, formed from the merger of Peugeot-Citroën and Fiat-Chrysler-Jeep, has invested heavily in the UK, converting Ellesmere Port to Europe’s first all-electric automotive plant last year.

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Davino warned that while the shutdown scenario is not yet on the agenda, it remains a possibility if the UK continues to present a “hostile environment” for the automotive market. She noted that the company has already reduced its supply of petrol cars to the UK by at least 14% to avoid hefty fines under the zero-emission vehicle mandate.

The current quota system requires manufacturers to ensure that 22% of their vehicles are battery electric this year, rising to 28% next year, and accelerating to 80% by 2030. Davino described the market as “very aggressive,” with pressure on margins exacerbated by the high cost of electric vehicle production and stringent volume targets.

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Stellantis, which sells about 13% of its cars as battery-electric, has committed to avoiding zero-emission mandate fines, necessitating a reduction in market share to meet quotas. This approach could lead to a 14% cut in UK vehicle volumes, equating to a two-percentage point reduction in market share.

The company’s frustration stems from the lack of government support despite its significant commitment to electric vehicle production in the UK. Group CEO Carlos Tavares has unsuccessfully lobbied Conservative ministers for mitigations or exemptions from the zero-emission mandates.

To prevent the potential closure of the UK factories, Davino emphasised the need for immediate incentives for private buyers, including cash and fiscal support, to stimulate demand across the broader market, not just for premium electric cars. She also criticised the rapid trajectory of zero-emission quotas, which outpace the current market take-up rate of 16%.

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Davino concluded with a call for the new UK government to foster an environment that promotes clean and green mobility for all, warning against a “race to the bottom” in corporate and human rights standards, and advocating for equitable access to sustainable transportation.

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Stellantis Warns of Potential UK Factory Closures Over Electric-Car Subsidies

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