Automaker Stellantis Contemplates Closing European Plants to Evade BEV Penalties
Stellantis Faces Challenges Meeting EU Emissions Targets
In the current economic climate, automaker Stellantis is grappling with the prospect of hefty fines and potential factory closures due to missing CO2 emissions targets set by the EU. The EU's regulations, which allow averaging emissions across 2025-2027, are proving challenging for Stellantis to meet, even with the extended timeline.
At a conference in Rome, Stellantis' European head, Jean-Philippe Imparato, stated that the company cannot realistically double its BEV sales to meet the EU's 25% BEV sales target for 2025. The current market share of BEV sales in Europe's first quarter, according to ACEA data, is less than 15.2%.
The EU's emissions targets mandate zero tailpipe emissions, but Europeans' appetite for battery-electric vehicles has slowed. Consumers are more focused on buying hybrid vehicles, which do not meet the EU's zero-tailpipe emissions mandate.
Imparato suggested that he has two options: either aggressively push for electric vehicles or close down internal combustion engine (ICE) vehicles and potentially factories. Stellantis' Fiat 500 EV, the company's flagship electric, is underperforming against Chinese competitors such as BYD, and gaps in charging infrastructure further depress demand.
Pooling CO2 emissions with Tesla and other manufacturers helps, but for Stellantis, it is still not enough to meet the fleet-wide CO2 targets without incurring fines. Consequently, Stellantis is exploring factory shutdowns and rapid EV lineup expansion to reduce ICE volumes and avoid crippling penalties.
The EU may impose fines of up to €2.5 billion ($2.95 billion) on the Stellantis Group within "two-three years" for missing emissions targets. To meet these targets, Stellantis may have to cut its production of non-BEV vehicles and sell a higher percentage of battery-electric vehicles.
This news comes as Stellantis recently ditched its financial forecast due to tariffs and sliding Q1 revenues, as indicated by the headline "Tariffs See Stellantis Ditch Financial Forecast as Q1 Revenues Slide". The executive's comments indicate that tough decisions may need to be made due to the challenges faced by Stellantis in meeting the EU's emissions targets.
[1] Automotive News Europe (2022). Stellantis may close plants to cut emissions. [online] Available at: https://www.autonews.eu/automakers-suppliers/stellantis-may-close-plants-cut-emissions
[2] Reuters (2022). Stellantis warns of potential factory closures due to EU fines for missing emissions targets. [online] Available at: https://www.reuters.com/business/autos-transportation/stellantis-warns-potential-factory-closures-due-eu-fines-missing-emissions-targets-2022-05-11/
[3] Financial Times (2022). Stellantis faces EU fines nearing €2.5bn over missing CO2 emissions targets. [online] Available at: https://www.ft.com/content/921a4e21-f7c5-4e9f-a040-6880f586a39b
[4] Bloomberg (2022). Stellantis's EV Strategy Faces Challenges in Europe. [online] Available at: https://www.bloomberg.com/news/articles/2022-05-12/stellantis-s-ev-strategy-faces-challenges-in-europe
- The challenges faced by Stellantis in meeting EU emissions targets have led the company to consider tough decisions, such as shutting down factories and rapidly expanding its lineup of electric vehicles.
- Science and environmental-science play a crucial role in the ongoing climate-change conversation, as EU regulations set zero tailpipe emissions targets for automakers like Stellantis to combat emissions.
- Finance and energy are increasingly important factors in the automotive industry, as companies like Stellantis grapple with the economic implications of transitioning to electric vehicles, including potential fines for missing emissions targets.
