In a bold move, Stellantis has announced plans to significantly reduce its production of gasoline and diesel-powered cars in Europe, starting as early as next month. This decision comes as the auto giant braces itself for the impending tightening of the European Union’s fleet emissions targets. Jean-Philippe Imparato, the recently appointed Chief Operating Officer for Stellantis’ European operations, revealed that the production cuts are necessary to avoid hefty fines that could quickly accumulate if the automaker exceeds emissions limits.
Starting on January 1, 2025, the EU will impose stricter fleet emissions targets, lowering the current cap from 115.1 g/km to 93.6 g/km—a significant reduction of about 19%. Automakers that exceed these targets will face fines of €95 per excess gram per vehicle, a cost that could skyrocket for companies with large fleets like Stellantis.
While some automakers like Tesla and Geely have already met next year’s targets, Stellantis, known for its wide array of SUVs, faces a tougher challenge. Companies with heavier vehicles, like SUVs, have higher individual targets, but still must work within the broader fleet average.
Renault’s CEO, Luca de Meo, has previously warned that automakers across Europe could be facing fines totaling up to €15 billion. Barclays Bank, however, predicts the total to be around €10 billion. Either way, the stakes are high, and Stellantis is not willing to take the risk.
With demand for electric vehicles (EVs) not quite meeting expectations, accounting for just 14.7% of the market in the EU, EFTA, and UK regions, Stellantis faces a difficult balancing act. Although EV sales have dropped by 15.2% in the first nine months of 2023, Stellantis is nonetheless committed to pivoting toward electric vehicles in an effort to avoid the crushing fines that come with producing too many internal combustion engine (ICE) cars.
By shifting its focus to EVs, Stellantis is looking to mitigate the risk of non-compliance, even if profit margins on gasoline and diesel cars remain higher for the time being. The automaker has calculated that reducing ICE production now, rather than facing potential penalties, is the safer long-term bet.
The future only becomes more challenging for car manufacturers in Europe, as emissions targets will become even more stringent by 2030. By then, the emissions threshold will drop from 93.6 g/km to 49.5 g/km, with an eventual requirement to reach 0 g/km by 2035, effectively phasing out new ICE vehicles across the EU. While synthetic fuels and hydrogen-powered cars may provide an alternative, the infrastructure for such vehicles remains far from ready.
As Stellantis navigates these shifts, it will channel more resources into EV production and scale back on ICE vehicles, positioning itself for a future dominated by electrification and stringent environmental standards.
