The net zero crackdown on combustion engines could force the maker of Vauxhall to pull out of Britain, its boss has warned.
Carlos Tavares, 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 – or even stop selling them here altogether.
A source close to the company said the more likely option was to restrict sales in Britain.
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 in order to meet the targets and avoid punitive fines.
The chief executive’s remarks are the biggest intervention yet from a major carmaker, as others have also recently warned that legislation in the UK and Europe is moving quicker than demand.
Sales of battery electric models made up about 15.5pc of the 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 (SMMT).
But under the ZEV mandate, which the UK brought into force in January, at least 22pc of cars sold by manufacturers must 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.
But Mr Tavares said the rules were “terrible for the UK”, claiming he had urged Mark Harper, the Transport Secretary, to make changes in a meeting on Wednesday.
In a briefing with journalists on Thursday, 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.
“If your mandate is imposing on you a level of BEV [battery electric vehicle] sales mix that is double the natural demand of the market, and if the ZEV mandate puts me in a corner by saying, ‘if you don’t meet this, I’m going to kill you with fines’, the consequence is that everybody will start pushing the BEV, which then totally destroys profitability.
“You would not expect Stellantis to support a red ink business.”
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 also warned that forcing carmakers to oversell EVs would leave European carmakers more exposed to the threat from cut-price Chinese electric car 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 of EVs 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 that were scrapped in 2022, adding: “I am not asking for incentives. I could. But that [means] more taxes for UK citizens – I don’t think we need more taxes.”
He said: “What I’m saying is, why don’t we try to be offensive instead of being defensive against the Chinese, who obviously are demonstrating some kind of additional competitiveness?
“Why don’t we try ourselves to accelerate, and to use the brains of our people, to move faster in the affordability, in the technology, the manufacturing?”
It comes after The Telegraph revealed that three-quarters of new EVs listed on Auto Trader were being advertised at a discount, in a sign that manufacturers and dealers are already being forced to slash prices.
The Government has previously insisted that the ZEV mandate will safeguard British industry jobs and is “specifically designed to support existing manufacturers by providing flexibilities so they can comply with targets over time”.
The Department for Transport was contacted for comment.
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