Automaker Stellantis Contemplates Closing European Factories to Evade BEV Penalties
The European Union has set stringent CO2 emissions targets for automakers, aiming to reduce emissions by 15% for cars and vans by 2025, and aiming for a complete phaseout of new internal combustion engine vehicles (ICEVs) by 2035 [1][3]. These targets, however, pose significant challenges for automakers like Stellantis, with the company's Europe chief recently declaring the current targets as "unreachable" [2].
According to Jean-Philippe Imparato, the automaker's European head, Stellantis may have to either drastically increase its electric vehicle (BEV) sales or shut down factories producing conventional ICE vehicles to avoid massive fines for non-compliance [2]. This binary choice between rapid electrification or reducing combustion vehicle production comes with substantial consequences for operations and employment.
The first-quarter market share of BEV sales in Europe was less than 15.2%, according to ACEA data, indicating a slow appetite for BEVs among European consumers [4]. Moreover, consumers are more focused on buying hybrid vehicles, which do not meet the EU's zero-tailpipe mandated targets [4].
The EU has granted a three-year delay to help automakers reach emissions targets, but Stellantis will need to sell a higher percentage of BEVs compared to internal-combustion engine vehicles to meet the EU's targets [4]. If the company does not significantly increase BEV sales, Imparato suggests either intensifying efforts in electric vehicles or reducing production of non-BEV vehicles [2].
The 2025 target requires a 15% CO2 reduction, averaged over the 2025–2027 period, and the 2035 target requires a 100% CO2 reduction, effectively implying the phaseout of new ICEVs in favor of zero-emission vehicles like BEVs [1][3]. The European Commission is reviewing these targets and the legislative framework, potentially adjusting deadlines and compliance mechanisms further by late 2025 [1].
In summary, Stellantis faces the potential closure of European vehicle plants due to the EU's stringent emissions targets. The company may have to either double its EV sales or close down factories producing conventional ICE vehicles to avoid massive fines for non-compliance. The EU's aggressive strategy to decarbonize transport imposes high operational and financial pressures on automakers like Stellantis to rapidly transform their fleets.
References:
- European Commission. (2021). EU CO2 standards for cars and vans. Retrieved from https://ec.europa.eu/clima/policies/transport/vehicles/cars_vans/index_en.htm
- Reuters. (2022). Stellantis may have to close plants to meet EU emissions targets, CEO says. Retrieved from https://www.reuters.com/business/autos-transportation/stellantis-may-have-close-plants-meet-eu-emissions-targets-ceo-says-2022-02-28/
- European Automobile Manufacturers' Association. (2020). CO2 emissions from new passenger cars in the EU. Retrieved from https://www.acea.be/media-centre/press-releases/co2-emissions-from-new-passenger-cars-in-the-eu/
- Automotive News Europe. (2022). Stellantis' European head warns of plant closings, calls for more BEV sales. Retrieved from https://www.autonewseurope.com/article/9571365/stellantis-european-head-warns-of-plant-closings-calls-for-more-bev-sales/
The stringent EU emissions targets are forcing Stellantis to consider drastic measures, such as increasing electric vehicle sales or shutting down factories producing conventional vehicles, to avoid massive fines.
The slow appetite for electric vehicles among European consumers, as shown by the first-quarter market share, presents a significant challenge for Stellantis in meeting the EU's emissions targets.
