Stellantis "could stop" UK vehicle production in "hostile" conditions

Stellantis’s UK boss Maria Grazia Davino has warned that the company could stop building vehicles in the country if the government’s electrification initiatives create a “hostile” trading environment.

Speaking at the Society of Motor Manufacturers and Traders’ annual summit in London, Davino cautioned of the existential threat posed by measures like the Zero-Emission Vehicle (ZEV) mandate and proposed 2030/2035 bans on the sale of new combustion-engined cars.

Asked by Autocar whether Stellantis can continue to grow its UK business under the current terms of the ZEV mandate – which mean a rising proportion of each manufacturer's sales in the UK must be electric from 2024-2030 – Davino said: "Yes, we can continue to grow. We can survive because we are fit for every circumstance."

But, she said: " In the UK, for sure there will be consequences on the production set-up.

"Stellantis UK does not stop. Stellantis production in the UK could stop."

Davino echoed recent comments by Carlos Tavares, the CEO of Stellantis, which labelled the ZEV mandate “terrible” and wanted it could “kill” the UK automotive industry.

Stellantis currently builds small and mid-sized vans and MPVs at its factories in Ellesmere Port and Luton, respectively, having ended UK car production on the retirement of the last-gen Vauxhall Astra in 2021.

“It’s not what we want to do”, said Davino, adding that she does “not have a plan” or a projected timeframe for ending UK production if the need arises.

As of 2024, 22% of every manufacturer's UK sales must be pure-electric, or punitive penalties are imposed. This proportion rises in increments to 80% in 2030, before combustion sales are banned completely in 2035 - under current Conservative policy. Labour has said it will bring this ban back to 2030.

But Davino said the current market demand does not back up this projected timescale: "This trajectory could be very damaging in the near future for the industry. It's not only what happens in 2030 or 2035, but what happens in 2024, 2025, 2026...

"Because if demand does not follow the offer, then we will be forced to take decisions because we manage profit and loss, we manage operational decisions that are impacting the UK."

"I can't answer the question about 'when?', because we don't plan this. It's not what we want to do, and we will fight for our production in the UK.

"But you have to have advantages to build in a country."

Davino pointed to substantial recent investments in the Cheshire and Bedfordshire plants as proof of Stellantis’s commitment to the UK, but said “why should we continue investing” if operations at those plants are rendered unviable by "hostile" market conditions.

"We will enter into an evaluation of producing elsewhere; we produce for the UK but also largely for export reasons, so we will invest elsewhere or disinvest from here."

She emphasised that the decision is not "on the table" and future plans are contingent on evolving market conditions.

She referred back to the "proactive proposals" presented by Carlos Tavares to UK officials recently. These included counting UK-built EVs towards each manufacturer's ZEV quota, and bundling together electric light commercial vehicles and passenger EVs.

Tavares said recently: "I think the fact that [the UK government] is imposing a ramp-up of [EV sales] makes sense" but added: "The problem is the magnitude and the positioning of the ZEV mandate vis-à-vis the natural demand of the market."

He estimated that demand for EVs in the UK is currently at half of the mandated 22% for 2024, and said the imposition of fines for non-compliant manufacturers could dent profitability to such an extend that "then destroys the company".

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