Stellantis has issued a stark warning about the future of its UK factories, potentially halting production if the government does not ramp up support for electric vehicles.
The company highlights the negative impact on the UK’s automotive industry without immediate incentives and reduced zero-emission targets.
Immediate Threats to UK Factories
Stellantis has sounded an alarm over the fate of its two UK factories in Luton and Ellesmere Port. The company argues that without increased government subsidies for electric vehicles and a relaxation of stringent zero-emission targets, these factories could face closure. This would be a significant blow to the UK, as the Luton and Ellesmere Port plants collectively employ around 2,500 people.
The loss of these factories would spell the end of over a century of vehicle production in the UK under the Vauxhall brand. Stellantis, created through the merger of Peugeot-Citroën and Fiat-Chrysler-Jeep, has invested extensively in the UK market. Notably, it converted the Ellesmere Port plant to Europe’s first all-electric automotive facility last year.
Tough Market Conditions
Davino, speaking at the UK’s Society of Motor Manufacturers and Traders annual summit, emphasised how the UK’s current market conditions have made it difficult for automakers. She pointed out that the zero-emission vehicle quotas are particularly burdensome, requiring manufacturers to ensure that 22% of their vehicles are battery electric this year, with this figure rising sharply to 28% next year and 80% by 2030.
Such aggressive targets have put additional pressure on profit margins, largely due to the high costs associated with electric vehicle production. Stellantis, already selling around 13% of its cars as battery-electric, is committed to avoiding zero-emission fines, which necessitates a strategic reduction in its market share to meet these stringent quotas.
Strategic Adjustments and Market Impact
Stellantis has already been forced to cut its supply of petrol cars to the UK by at least 14% to avoid substantial fines under the zero-emission mandate. This move could lead to a significant reduction in UK vehicle volumes, potentially lowering the company’s market share by two percentage points.
The company’s frustration is palpable given its substantial commitment to the UK electric vehicle market. Despite this, there remains a glaring lack of government support. Group CEO Carlos Tavares has persistently lobbied UK ministers for mitigations or exemptions, but these efforts have yet to bear fruit.
Davino has warned that while the shutdown of the factories is not currently on the agenda, it remains a realistic possibility if the UK continues to present a hostile environment for the automotive market.
Call for Government Action
To avert the potential closure of these crucial UK factories, Stellantis is calling for immediate government incentives. Davino stressed that these should include both cash and fiscal support to stimulate demand, not just for premium electric vehicles but across the broader market. Immediate action is necessary to fortify the automotive industry and ensure its sustainability.
The current market trajectory, as outlined by Davino, is unsustainable. The rapid increase in zero-emission quotas far outpaces the current market take-up rate of 16%, creating an untenable situation for manufacturers.
A Global Perspective and Broader Implications
Stellantis is not the only company affected by the UK’s stringent market conditions. Several other automakers have voiced similar concerns, indicating a broader industry issue that could have far-reaching implications for the UK’s position in the global automotive market.
Davino has urged the UK government to create a more favourable environment for automakers, promoting clean and green mobility for all. She warned against a ‘race to the bottom’ in corporate and human rights standards, advocating for policies that ensure equitable access to sustainable transportation. Enhanced government support is critical to achieving this vision.
The broader industry implications are stark. Without substantial government intervention, the UK risks falling behind in the global race to dominate the electric vehicle market. This would not only impact domestic manufacturers but could also deter foreign investment.
Stellantis’ Commitment to Sustainability
Despite the challenges, Stellantis remains committed to its sustainability goals. The company has made significant strides in promoting electric vehicles, evidenced by the conversion of Ellesmere Port into an all-electric plant.
However, achieving these sustainability milestones requires conducive market conditions. A balanced approach from the government, including supportive policies and realistic quotas, is essential for the long-term viability of the electric vehicle sector in the UK.
Rising Pressure on the Government
The pressure is now squarely on the UK government to act decisively. Stellantis’ call for immediate incentives and reduced zero-emission targets encapsulates the growing discontent within the automotive industry.
Failure to address these concerns could result in severe economic repercussions, including job losses and a decline in the UK’s automotive manufacturing capabilities.
The future of Stellantis’ UK factories hangs in the balance as the company awaits government action on electric vehicle subsidies and zero-emission targets.
Immediate and substantial government intervention is crucial to secure the sustainability of the UK’s automotive industry and preserve its rich manufacturing legacy.
