Will EU Emissions Rules Make Stellantis Close Car Factories?
Stellantis, the carmaker behind Vauxhall, Fiat, Peugeot and Citroën, warns that tightening emissions rules could lead to plant closures across Europe, including the UK.
With pressure mounting from both EU and UK governments on carbon output, the company’s leadership says without a dramatic shift in electric vehicle (EV) sales, the group faces stark choices over its factory network.
EU emissions rules risk factory shutdowns
Speaking at a press event in Italy, Stellantis’s Chief Operating Officer for Europe, Jean-Philippe Imparato, puts the situation plainly. “I have two solutions: either I push like hell [on electric] ... or I close down ICE,” he says, referring to internal combustion engine models, “And, therefore, I close down factories.”
Under new EU regulations, carmakers must meet strict carbon emissions targets from 2025 to 2027. These rules are based on average carbon output across a manufacturer’s sales.
If companies fail to hit their quota of low or zero-emission vehicles, they face heavy fines. For Stellantis, the total could reach €2.5bn (US$2.7bn) over that three-year span.
Jean-Philippe describes the target as “unreachable” unless electric car sales double. If that doesn’t happen, Stellantis would need to cut back production of petrol and diesel models – and that could mean shutting sites.
The company currently operates more than 50 factories worldwide, with around 20 located in Europe. Jean-Philippe stops short of naming specific closures, but mentions the Atessa van plant in Italy.
The Telegraph also points out that the Luton van plant in the UK already shut earlier this year, narrowing the group’s British footprint.
That leaves Ellesmere Port, which is being upgraded to produce only electric vans. Production is expected to start late next year. When asked whether this site could also face closure, a spokesperson says Stellantis has invested heavily but gives no guarantees.
Net-zero policies put UK sites on alert
Pressure from UK policy adds to the picture. Stellantis has previously warned that Britain’s net-zero targets are making operations less viable.
As reported by The Sun in 2024, the company said it could halt UK production entirely if targets stay as they are.
The UK currently requires 22% of new car sales to be zero-emission in 2024. This rises to 80% by 2030, with a proposed ban on new petrol and diesel cars moving forward to 2030 under Labour’s plans.
“Stellantis UK does not stop, but Stellantis production in the UK could stop,” said Maria Grazia Davino, former Managing Director at Stellantis UK at the time.
Around 2,500 jobs across the UK supply chain, including at Luton and Ellesmere Port, are at risk.
Maria added that Stellantis may be forced to sell EVs at a loss simply to hit targets and avoid fines of up to £15,000 per vehicle. She questioned whether the UK remains a good place to invest: “You have to ask why should I continue investing in this country that has these negative results?”
If the government doesn’t act within the year, she warned that Stellantis will “enter an evaluation of producing elsewhere”.
Industry demands clearer incentives
The Society of Motor Manufacturers and Traders (SMMT), which represents the British car industry, has joined the call for more support.
Quoted in The Telegraph, Mike Hawes, SMMT Chief Executive, lays out the challenges: “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.”
He adds: “We need a compelling offer that redefines the UK’s appeal as a place to invest.”
The UK Government has responded by including automotive production in its industrial strategy.
Business Secretary Jonathan Reynolds states: “Our collective job is to bring more investment, more product lines and more jobs here.”
Europe prepares financial safety net for polluters
Meanwhile, the European Commission says it will support sectors hit hardest by the shift to low-carbon production. EU Climate Commissioner Wopke Hoekstra outlines a compensation plan for firms exporting to regions without equivalent emissions charges.
He confirms that €70m (US$82m) will be available next year, paid from revenues collected through the EU’s carbon border tariff. This tariff is expected to raise €2.1bn by 2030.
Wopke says: “We’re doing this specifically for those companies at the risk of losing out because they are exporting.”
He assures firms the scheme will be secure: “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.”
As carbon targets close in, the pressure is rising on both the British and European automotive sectors.
For Stellantis, the choice is becoming stark: go electric fast or face closures.
