COULD STELLANTIS EXIT THE UK? Tavares blasts ZEV mandate
Stellantis CEO calls zero-emission vehicle mandate “terrible” but offers alternatives
Stellantis boss Carlos Tavares has branded the current zero-emission vehicle (ZEV) mandate a “terrible thing for the UK” and warned that it could “kill” the domestic automotive industry.
Under the current terms of the ZEV mandate, car makers must achieve at least a 22% sales mix of pure-electric models in the UK this year or risk heavy penalties. That proportion rises in increments to 80% in 2030 on the way to combustion car sales being stopped in 2035.
Speaking to UK journalists from Stellantis’s small van factory at Ellesmere Port, Tavares agreed with the logic behind this notion. He said: “I think the fact that they are imposing a ramp-up of [EV sales] makes sense.” But he added: “The problem is the magnitude and the positioning of the ZEV mandate vis-à-vis the natural demand of the market.”
He estimated that “the natural demand of the market today in the UK for BEVS is half of the mandate” and he cautioned on the dangers of boosting this proportion with legislation and fines.
“If your mandate is imposing on you a level of BEV sales mix that is the double of the natural demand of the market, and if the ZEV mandate is putting you in a corner by saying ‘if you don’t meet this, I’m going to kill you with fines’, then the consequence is that everybody will start pushing BEVS into the market, which then totally destroys profitability, which then destroys the company,” said Tavares.
“This is not rocket science. You have a mandate that is going to kill your industry.”
Tavares said he met with UK transport secretary Mark Harper last week and proposed two alternatives to the current ZEV mandate structure that theoretically “do not cost one penny to the UK taxpayer”.
The first is to bundle the passenger car ZEV mandate with light commercial vehicles (LCVS) “because the planet does not care if the CO2 is coming from [cars] or from LCVS. We just want to reduce emissions.”
He suggested that this would give more flexibility to car makers and avoid the
❝ It’s not rocket science. You have a mandate that will kill your industry ❞
need to “push the metal” by artificially boosting electric passenger car sales to meet the mandated targets.
His second idea, “which is even more obvious”, is to reward locally based vehicle manufacturers by including their Uk-produced models as contributions to their ZEV sales mix, irrespective of whether they will be sold in the UK or not.
Stellantis has two UK factories: one in Luton producing mid-sized vans, including the Vauxhall Vivaro and Peugeot Expert, and the smaller van and MPV plant in Ellesmere Port, near Liverpool.
Highlighting the significant supply chain and employment implications that this has for the UK, Tavares questioned why his company is subject to the same terms as manufacturers that build elsewhere.
He said: “The mandate is treating me the same as anybody that brings [vehicles] from somewhere else. What is my benefit to be in the UK with manufacturing? And how do you support the jobs of your people?”
Tavares added: “Any BEV produced at a UK plant – to be sold in the UK or to be exported, which is superb for the trade balance of the country – should be counted in the mandate.
“CO2 is a global worldwide problem. The CO2 does not stop at the country border.”
Tavares said Harper was in a “good listening mode” when he presented his proposals and he is “waiting for the answer” but would not anticipate the government’s final decision on the matter.
But, stressed Tavares, a decision is needed urgently. “I said that we are in a hurry. Time is ticking,” he said.
Carlos Tavares has previously warned of job losses and factory shutdowns in other European markets if more favourable production conditions are not achieved – and he echoed similar sentiments for the UK if the ZEV mandate is unchanged and Stellantis cannot continue building vehicles here profitably.
He said: “You cannot expect good things for a red ink [unprofitable] business. [If] you create red ink in sales and marketing, that then is going to create a downtrend in manufacturing because people are not trying to sell cars at a loss.
“We are not a company that encourages market share to the detriment of profit. We want both.
“If the country does not want [automotive] companies to be successful, the conclusion is obvious. If people think that we are going to stay here accommodating regulations that people do not want, and be the fuse of this contradiction, that would be the wrong bet.”