Tavares orders strategic review of Stellantis UK due to ZEV Mandate risk

Stellantis chief executive Carlos Tavares has demanded a re-examination of the vehicle manufacturer's business prospects in the UK in light of the impact of the zero emission vehicles (ZEV) Mandate.

He said the government's policy is "damaging" to Stellantis.

The UK Government has set the ZEV Mandate to require car and van brands to hit ambitious EV sales mix targets or face hugely punative fines of £15,000 per vehicle in the years up to 2030.

Tavares, speaking as he described Stellantis's half-year results as a "disappointing" performance globally, said there is a "specific problem" with the UK that needs to be fixed, and given than Stellantis has vehicle assembly plants in the UK, at Luton and Ellesmere Port, that problem is driving a re-examination of the business here.

"The UK has shown to be, with the ZEV Mandate, a very difficult market.

"The ZEV Mandate is hurting, significantly, our business model, and this is triggering a strategic review of our business model, including the manufacturing footprint," said the Stellantis chief executive.

"We cannot accept, as we have two plants in the UK making BEVs (battery electric vehicles), as the UK Government is asking for more BEVs, we cannot be in a position where our business model is damaged by the ZEV Mandate."

Discussions between Stellantis and the UK Government have been under way, and will continue, he said.

It is an "intensive and productive dialogue", he said, but added that "so far, we don't have the answers we need".

"We will see what comes next, but I have decided to trigger a strategic review of our business model in the UK because we cannot be making EVs in the UK and be the victims of the ZEV Mandate. This is a contradiction that the company cannot accept."

Stellantis will work with the trade unions representing its UK workers on this, Tavares added.

He had already described Europe as a whole as a "very, very challenging market" that is under "a strong Chinese offensive" during the H1 results briefing.

The H1 results showed net revenues of €85.0 billion, down 14% compared to H1 2023, primarily due to the decline in sales volume and mix, while net profit of €5.6 billion was down 48% compared to H1 2023, again primarily due to lower volume and mix plus headwinds from foreign exchange and restructuring costs.

"It is an understatement to say that H1 2024 results were disappointing, and humbling," Tavares said.

It was a convergence of capital expenditure and M&A expenses that were too high, plus operational flaws that were internal to Stellantis, and some of the marketing tactics did not deliver the expected results. 

There have been particular problems in America, including high levels of inventory, that are yet to be tackled, whereas in Europe stock levels have been addressed.

Margins in America and Europe have also declined, although margins remain strong in South America, the Middle East and Africa.

Stellantis must rebound from here, he said.

Tavares outlined a 20 vehicle launch "blitz" in 2024, which included some Jeeps and pick-ups specific to the USA but also, for Europe, lower-priced BEVs such as the Fiat Grande Panda which will be sold for below €25,000 (£21,000) and popular SUVs such as the Opel/Vauxhall Grandland and Frontera.

The first electric cars from its new partnership with LeapMotor, a Chinese carmaker, will be sold in Europe from September.