Stellantis, the Franco-Italian automaker, may shutter factories to avoid crippling European Union fines for failing to meet stringent CO2 emission targets, according to its Europe chief. This development, reported by Reuters, signals a pivotal moment for electric vehicle (EV) adoption as regulatory pressures reshape the automotive industry.

EU’s Push for Cleaner Vehicles

The EU mandates that automakers increase EV sales to reduce CO2 emissions, aligning with efforts to combat climate change. Non-compliance risks hefty penalties, calculated based on emissions from 2025 to 2027. Stellantis faces potential fines of up to $2.95 billion within two to three years, a figure converted from 2.5 billion euros. Jean-Philippe Imparato, Stellantis’ Europe chief, called these targets “unreachable” at a recent conference in Rome’s lower house of parliament.

Stellantis Faces Factory Closures Over Eu Carbon Emission Fines

Tough Choices: EVs or Factory Cuts

Stellantis must either double its EV sales—an “impossible” feat, per Imparato—or slash production of internal combustion engine (ICE) vehicles, like petrol and diesel models, to improve its fleet’s energy mix.

“I have two solutions: either I push like hell (on electric) … or I close down ICE. And therefore I close down factories,” Imparato stated, specifically referencing the Atessa van-making plant in Italy.

This binary choice underscores the operational and economic challenges automakers face as they transition to electrification under tight deadlines.

Implications for the EV Industry

The threat of factory closures highlights the broader industry’s struggle to scale EV production amid supply chain constraints, high battery costs, and uneven consumer demand. Stellantis’ predicament could accelerate investment in EV manufacturing but risks job losses and reduced output of affordable ICE vehicles, potentially impacting rural EV adopters who rely on traditional models. Regulatory flexibility, successfully lobbied for by the industry to delay fines until 2027, offers temporary relief but doesn’t resolve the underlying challenge of meeting ambitious emission goals.

What’s Next for Stellantis and EV Owners

Without regulatory changes by year’s end, Stellantis may opt for drastic measures, reshaping its European operations. For EV owners and enthusiasts, this signals a faster pivot to electric models from brands like Jeep, Fiat, and Peugeot under Stellantis’ umbrella. However, reduced ICE production could strain availability of hybrid options, critical for transitioning markets. Imparato’s warning—“we will have to make tough decisions”—reflects the high stakes for automakers navigating this shift.

This situation underscores the urgency for EV infrastructure growth, from charging networks to battery production, to support automakers and consumers alike. As Stellantis braces for potential restructuring, the EV industry faces a defining moment in balancing innovation, economic stability, and environmental goals.

Photos courtesy of Stellantis