Stellantis plans to reassess its manufacturing operations in the United Kingdom, as CEO Carlos Tavares emphasized that a climate policy is harmful to the company’s business. According to Morningstar, the government-imposed zero-emission vehicle mandate, which sets electric car production targets for manufacturers, is negatively impacting Stellantis’ financial performance.
Stellantis may review its activities in he UK, CEO Carlos Tavares said
Stellantis operates two plants in the UK dedicated to producing battery electric vehicles, which have higher production costs than traditional vehicles. “I have decided to undertake a strategic review of our business model in the UK, as we cannot produce BEVs in the UK while also being subject to the ZEV mandate,” Carlos Tavares stated. “This is a contradiction that the company cannot accept.” The CEO also reported that Stellantis has initiated extensive discussions with the British government regarding this policy.
“So far, we don’t have the answers we need,” Carlos Tavares commented. “We’ll see what happens next.” Last month, Stellantis UK leader Maria Grazia Davino expressed similar views at the SMMT International Summit, highlighting the potential cessation of production in the UK due to the ZEV mandate set to take effect in January 2024.
The company’s financial results further underscore the urgency of the situation. Stellantis reported a significant decline in net profit for the first half of the year, with a 48% decrease compared to the same period in 2023. Revenues also fell by 14%, with the company’s performance particularly affected by market downturns in Europe and North America.
Stellantis’ adjusted operating profit for the first half of the year also decreased drastically, despite reductions in labor, material, and logistics costs. The disappointing financial results are attributed to reduced volumes and product mix, inventory reduction efforts, and slight production disruptions due to a generational portfolio change. Stellantis also experienced a decline in its North American market share.
In light of these challenges, Carlos Tavares stated that the automotive Group is ready to take decisive measures to improve margins and manage high inventory in its U.S. operations, including the potential discontinuation of underperforming brands. This marks a shift in Tavares’ position since the creation of Stellantis in 2021, when he had affirmed the future of all 14 brands in the company’s portfolio.