Stellantis CEO: Terrible ZEV mandate will kill UK car industry

Stellantis boss Carlos Tavares has branded the current 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 electric models in the UK this year or risk heavy penalties. That proportion will rise in increments to 80% in 2030, on the way to ICE 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, saying "I think the fact that they're imposing a ramp-up of [EV sales] makes sense" but adding: "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 cautioned of the dangers of boosting this proportion with legislation and fines. "That's where things start to go off track," he said. "The ZEV mandate as it is crafted today is a terrible thing for the UK." "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." "If you put everything in the red, you destroy the business, and you destroy the industry that supports the business, so that's strange." He summarised: "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 yesterday (24 April) and proposed two alternatives to the current ZEV mandate structure, which theoretically "do not cost one penny to the UK taxpayer". His first proposal is to bundle cars with light commercial vehicles (LCVs) in the ZEV mandate "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 need to "push the metal" by artificially boosting electric 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 one in Ellesmere Port, near Liverpool, producing smaller vans and MPVs. Highlighting the significant supply chain and employment implications this has for the UK, Tavares questioned why his company is subject to the same terms as manufacturers that build vehicles elsewhere. "The mandate is treating me the same as anybody that brings [vehicles] from somewhere else," he said. "What is my benefit to be in the UK with manufacturing? And how do you support the jobs of your people?" He said that "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," he reasoned. "The CO2 does not stop at the country border." He said Harper was in a "good listening mode" when he presented his proposals and that he is "waiting for the answer" but would not anticipate the government's final decision on the matter. However, Tavares stressed, a decision is needed urgently: "I said that we are in a hurry. Time is ticking." He said his proposals would result in "a win for the planet, a win for the UK, a win for the industry". Tavares has previously warned of job losses and factory shutdowns in European nations if more favourable production conditions aren't achieved and echoed similar sentiments for the UK if Stellantis is unable to continue building vehicles profitably here. "You can't expect good things for a red ink [unprofitable] business," he said. "[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." Tavares stopped short of confirming that he would pull vehicle production from the UK if changes are not made to the ZEV mandate, but said his proposals should be adopted if the UK is "sincere about having manufacturing in the country". Emphasising the pressing nature of the decision and highlighting its logic, he said: "This is something that should be decided overnight. In my company, this would have been decided in a 20-minute meeting." "If the country does not want [automotive] companies to be successful, the conclusion is obvious," he warned. "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." Tavares was speaking a few days after the UK government resisted widespread calls to reintroduce electric car purchase incentives to reignite flatlining demand, having phased out its Plug-in Car Grant (PiCG) in 2022. He acknowledged that the price of electric cars must come down across the board to encourage wider adoption but said he isn't in favour of incentives, as they would incur more taxes on UK citizens. Instead, he said, cost savings must be engineered into vehicle construction and the production lines themselves, in order to drive towards cultivating price parity between EVs and ICE cars.