Vauxhall owner says it may scale back in UK

Law to limit petrol car sales was ‘terrible for the UK’ and would force makers to sell at a loss, boss insists

The net zero crackdown on combustion engines could force the maker of Vauxhall Motors to scale back its presence in Britain, its boss has warned. Carlos Tavares, the chief executive of Stellantis, said that a law to limit petrol car sales was “terrible for the UK” and would force manufacturers to sell vehicles at a loss. If ministers did not make urgent changes to the rules, he refused to rule out halting sales of some models altogether.

THE net zero crackdown on combustion engines could force the maker of Vauxhall to scale back its presence in Britain, its boss has warned.

Carlos Tavares, the chief executive of Stellantis, said that a law to limit petrol car sales was “terrible for the UK” and would force manufacturers to sell vehicles at a loss.

If ministers did not make urgent changes to the rules, he suggested Stellantis could be required to slash the number of cars it sells in Britain – and refused to rule out halting sales of some models altogether.

A source close to the company said the more likely option was that sales could be restricted or that it would be forced to put up prices to compensate.

Asked whether the maker of Vauxhall and Citroën cars could stop selling models in the UK, he replied: “I’m not going to sell cars at a loss.”

Mr Tavares blamed sagging demand for electric cars, which were “crashing in the world of reality” due to high prices, poor charging infrastructure and range anxiety among consumers.

The “natural” market share of electric cars was currently just half of what car companies are required to sell under regulations brought into force this year, he added.

Mr Tavares warned that the Government’s zero emissions vehicle (ZEV) mandate would force carmakers to slash prices to unprofitable levels to meet targets and avoid punitive fines.

It is the biggest intervention yet from a major carmaker, after others also warned legislation in the UK and Europe is moving quicker than demand.

Sales of battery electric models made up about 15.5pc of total car registrations in the first three months of 2024, roughly the same proportion as a year ago, according to the Society of Motor Manufacturers and Traders.

But under the ZEV mandate, which came into force in January, at least 22pc of cars that manufacturers sell in the UK must now be electric. That target then ratchets up gradually to 80pc by 2030, with a total ban on sales of new petrol cars due to be imposed from 2035.

Mr Tavares said the rules were “terrible for the UK”, claiming he had urged Mark Harper, the Transport Secretary, to make changes. In a briefing with journalists yesterday, he added: “It’s very simple. The ZEV mandate is [forcing] carmakers to have a growing EV sales mix every year. The problem is the natural demand of the market today in the UK on EVS is half of the mandate.”

Being killed with fines would totally destroy profitability, he said.

He has urged the Government to ease pressure on carmakers by combining their allowance for passenger cars and light vans, while also letting manufacturers put cars they make for export towards their domestic targets.

Mr Tavares warned that forcing carmakers to oversell EVS would leave European carmakers more exposed to a threat from cut-price Chinese models.

However, he said Stellantis opposed the introduction of punitive tariffs on Chinese manufacturers, adding that the company was already “fighting everywhere” for market share and that “protectionism” would ultimately lead to higher prices that hurt consumers. He said the focus should be on bringing down the cost for the middle classes, adding: “If you only sell EVS to the wealthy, it doesn’t fix global warming.”

But Mr Tavares said he was not calling on ministers to reintroduce EV grants scrapped in 2022.”

He said: “Why don’t we try to be offensive instead of being defensive against the Chinese? Why don’t we try to accelerate, to use the brains of our people, to move faster in affordability, in the technology, the manufacturing?”

The Telegraph revealed that threequarters of new EVS listed on Auto Trader were advertised at a discount, in a sign that manufacturers and dealers are already being forced to slash prices.

A Department for Transport spokesman said: “We have extensively engaged with industry, including Stellantis, before launching the ZEV mandate to ensure it works for companies at different stages of the transition to EVS, which we’ll continue to support and have already invested more than £2bn into.”