Stellantis: EU carbon rules may shut manufacturing plants
Stellantis, which manufactures vehicles under brands including Vauxhall, Citroën, Peugeot and Fiat, says European Union carbon emissions rules could force it to shut vehicle manufacturing sites across the continent.
The company warns that unless it sees regulatory changes this year, it will have no choice but to make what it calls “tough decisions” about its internal combustion engine (ICE) operations.
As reported by The Telegraph Jean-Philippe Imparato, Chief Operating Officer for Stellantis in Europe, said at a press event in Italy: “I have two solutions: either I push like hell [on electric] … or I close down ICE. And, therefore, I close down factories.”
Under the European Union’s current framework, carmakers must meet average carbon output targets between 2025 and 2027.
The regulation forces them to boost EV sales or risk financial penalties. For Stellantis, that cost could reach as much as €2.5bn (US$2.7bn) over the next two to three years if targets are missed.
Jean-Philippe described the targets as “unreachable” and suggested that unless EV sales double, cuts to ICE production are unavoidable.
Stellantis runs more than 50 factories worldwide, with about 20 of those based in Europe. He did not confirm which plants may close, but referred to the Atessa van plant in Italy in his comments.
The Telegraph notes that the company’s Luton van factory in the UK has already shut earlier this year.
That leaves Ellesmere Port, near Liverpool, as the only operational Stellantis vehicle assembly site in the country. The site is being upgraded to transition to EV-only production, with electric van output planned to begin in late 2025.
A Stellantis spokesperson declined to say whether Ellesmere Port was at risk, but confirmed that “substantial investment” has gone into the plant.
Net-zero rules raise UK manufacturing concerns
Beyond the European Union, Stellantis has also expressed concern about the UK’s emissions rules and what it sees as limited flexibility for investment. In comments originally reported by The Sun earlier in 2024, the firm warned it might halt UK production if net-zero targets go ahead.
UK policy currently mandates that 22% of all new car sales must be zero-emission vehicles in 2024. That target increases to 80% by 2030. Labour has also backed plans to move the ban on new petrol and diesel vehicle sales from 2035 to 2030.
Maria Grazia Davino, former Managing Director at Stellantis UK, warned at the time: “Stellantis UK does not stop, but Stellantis production in the UK could stop.” If that happens, it could put up to 2,500 jobs at risk across the company’s sites in Luton and Ellesmere Port, as well as within its broader UK supply chain.
Maria added that Stellantis may have to offer heavy EV discounts to hit required sales thresholds and avoid fines, which could amount to £15,000 per vehicle. She said: “You have to ask why should I continue investing in this country that has these negative results?”
Industry and EU respond to competitiveness pressures
The wider industry is also voicing concern. The Society of Motor Manufacturers and Traders (SMMT) says that the investment environment for British carmakers is under threat due to high operational costs and regulatory complexity.
Mike Hawes, Chief Executive of the SMMT, states: “Electricity costs remain, as we speak, the highest in the world. Internationally, we're worst for business rates, amongst the worst for the burden of government regulation. We need a compelling offer that redefines the UK’s appeal as a place to invest.”
The UK government has responded by naming automotive production as part of its industrial strategy. Business Secretary Jonathan Reynolds says: “Our collective job is to bring more investment, more product lines and more jobs here.”
Meanwhile, the European Commission confirmed it will offer targeted compensation to exporting manufacturers hit by carbon pricing, particularly in sectors such as aluminium and steel.
EU Climate Commissioner Wopke Hoekstra says the scheme will offer €70m (US$82m) in 2026, with money raised through the carbon border tariff. That tariff, scheduled to be fully operational by 2030, is expected to generate €2.1bn in revenue.
Wopke explains: “We’re doing this specifically for those companies at the risk of losing out because they are exporting.”
He adds that the policy will be strictly enforced, noting: “We want to make absolutely sure that this system is not going to be manipulated or exploited by actors from outside of the European Union.”
