Stellantis Warns of Plant Closures Amid EV Sales Mandate Challenges

In June, Stellantis issued a stark warning regarding the potential closure of its Ellesmere Port and Luton plants, urging government ministers to reconsider regulations that mandate a specific percentage of electric vehicle (EV) sales. These facilities, which produce electric cars and vans and employ over 1,000 workers, remain at risk as the company pushes for modifications to the newly introduced Zero Emission Vehicle (ZEV) mandate.

The ZEV mandate, implemented this year, requires that 22% of vehicles sold by manufacturers be electric, with this percentage set to increase annually until 2030. Manufacturers that fail to meet these targets face substantial penalties, including fines of £15,000 for each non-compliant vehicle or the option to trade carbon credits with competitors to offset their shortcomings.

Stellantis CEO Carlos Tavares has expressed concerns that the current regulatory framework compels manufacturers to sell more EVs than the market can support, leading to drastic price cuts in an attempt to boost sales. During a recent interview with Bloomberg, Tavares emphasized the necessity of government support to enhance consumer demand for electric vehicles, indicating that a decision regarding the future of the plants would be made shortly.

This situation arises even as EV sales reached a record high in September, with a 25% increase to 56,362 units sold. However, this surge is largely attributed to demand from fleet operators rather than private consumers. Despite aggressive discounts, sales of electric vehicles to private buyers rose by only 3.7% year-on-year, underscoring the need for additional incentives to make EVs more attractive to individual consumers.

Stellantis’ predicament highlights the broader challenges facing automakers in adapting to rapidly changing market conditions and regulatory environments. The company’s calls for reform reflect a growing concern among manufacturers about balancing compliance with consumer demand in a shifting automotive landscape. As discussions continue around the future of the ZEV mandate, the fate of the Ellesmere Port and Luton plants hangs in the balance, prompting urgent calls for government intervention to support both manufacturers and consumers in the transition to electric mobility.