As Stellantis gears up for higher electric vehicle (EV) production in Europe, it is also facing some friction from politicians who are sensitive to where it will put future EV investment. In particular, the company – embracing a large portfolio of volume car brands that include Fiat, Peugeot, Citroen, Chrysler and Opel/Vauxhall – has attracted the attention of Italian politicians concerned about prospects for future vehicle production in Italy.
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Italy’s government has been in discussions with Stellantis surrounding its long-term future volume plan; Rome wants the company – responsible for Italy’s ‘national champion’ Fiat brand – to get back to one million units a year of vehicle production in Italy. It was around 750,000 in 2023 and Italy’s prime minister Georgia Meloni has voiced concerns that the company acts against Italy’s national interest and that the creation of Stellantis was a de facto takeover of Italy’s auto industry by France.
As the auto industry in Europe braces for a Chinese export offensive spearheaded by cheap EVs from manufacturers such as BYD, car company bosses in Europe face tough decisions on where to focus capacity and maintain competitiveness versus the Chinese.
“The subsidies and incentives offered by national governments are going to be important,” said GlobalData analyst Justin Cox, speaking to Just Auto. “That is in the background and is a significant factor, but also the car companies themselves – such as Stellantis – have to look very carefully at plant model-mix, developing supply chains and overall levels of capacity utilisation. Stellantis’ rate of capacity utilisation at European factories stood at just 56% in 2023. Companies like to be achieving at least 75% to have a chance of breaking even.
“Of particular importance is going to be the issue of where the production of future EVs is allocated. Viewed from Rome, you can see why politicians there are concerned.
“There have been a number of decisions to build future Stellantis EVs at French factories and the bulk of Italy’s auto industry is tied up with Stellantis. France has eggs in more baskets with Renault as well as the ex-Peugeot-Citroen factories operating under Stellantis. The French industry is bigger than Italy’s and scale always means a lot in the auto industry.
“As auto executives face the emerging competitive – arguably existential – threat from China in Europe, they will naturally have to consider this political dimension and possible incentives for EVs or subsidies that governments may offer to move the dial and attract investment. This also follows for major components in the supply chain, such as batteries.
“We can expect more difficult discussions, political tensions and some tough decisions ahead as industrial capacity adjusts for the transition to EVs and prevailing demand levels. The Chinese OEMs’ ambitious expansion plans are adding a sense of urgency and fuelling tensions.”
