Imminent Peril Lies Ahead in Mere Months
Electric vehicle (EV) sales are poised for growth, but the industry is facing challenges that could lead to plant closures, according to Jean Philippe Imparato, the European chief of automotive giant Stellantis.
The current level of EV sales stands at 9%, a figure that falls short of Europe's ambitious target of 24% by 2027. This shortfall could result in a potential €2.6 billion fine for Stellantis if the market's electric vehicle level remains at 9%.
Imparato visited the Stellantis plant in Hordain, where electric vehicles are produced, and warned of potential plant closures if the fine is paid. He has also invited Europe to ease its environmental sustainability targets, arguing that the current struggles in the EV industry could lead to a potential disaster.
Sales of electric vans for Stellantis are also going very poorly, reflecting a broader trend in the industry. The competitive landscape with hybrids gaining market share suggests that manufacturers face challenges in scaling EV production and adoption.
Hybrids currently outperform EVs in some markets, capturing greater retail shares, which may indicate consumer hesitancy or infrastructure limitations affecting EV van sales. Europe, however, presents a stronger market for EV adoption compared to the U.S., with a 20% EV market share in Q1 2025.
Key challenges for Stellantis and similar manufacturers include managing production costs and reducing prices to make electric vans more competitive, navigating fluctuating consumer preferences, meeting Europe's ambitious CO2 reduction targets and zero-emission vehicle mandates, and expanding charging infrastructure and incentives to support wider EV adoption.
While EV sales are growing globally and in Europe, the pace is somewhat slower than initially forecasted. If the market's electric vehicle level increases significantly, the fine could be avoided, providing a potential lifeline for manufacturers like Stellantis. However, if the fine is paid, it could limit diesel vehicle production, impacting the company's overall production and revenue.
[1] Cox Automotive (2022). Q2 2022 Electric Vehicle Outlook. [Online]. Available: https://www.coxautoinc.com/media/news/cox-automotive-q2-2022-electric-vehicle-outlook
[2] European Automobile Manufacturers' Association (2022). Q1 2022 European Car Registrations. [Online]. Available: https://www.acea.be/media/368352/q1-2022-european-car-registrations.pdf
- The average EV market share among manufacturers, including Stellantis, significantly lags behind Europe's target, with finance concerns arising as the industry struggles to meet the set goals, especially in the finance and energy sectors.
- In the face of challenges such as high production costs and competition from hybrids, the energy-driven shift towards electric vans is facing a slower adoption rate compared to initial projections, potentially impacting the overall finance and industry landscape.
