Stellantis is gearing up to scale back production of internal combustion engine (ICE) vehicles in Europe to align with the EU's Zero-Emission Vehicle (ZEV) targets, which increase annually until 2035. This shift could begin as early as next month as Stellantis prioritises cutting ICE output overpaying hefty fines for non-compliance. Jean-Philippe Imparato, Stellantis’ European COO, emphasised the importance of meeting a 24% electric vehicle (EV) sales target by 2025. The company also plans to apply similar strategies in non-EU markets like the UK, where it has already reduced ICE model production and prices.

This approach sets Stellantis apart from competitors like BMW, whose CEO, Oliver Zipse, has called for changes to the 2035 EU mandate. Despite BMW's strong EV sales in Europe, the company believes the target is unrealistic, advocating for a more flexible timeline. Stellantis, however, sees the reduction of ICE production as a necessary move to meet the stringent ZEV requirements without disrupting their overall sales.

Imparato noted that while EV demand varies across Europe, nations with higher electric adoption can offset the shortfall in others, making the average fleet CO2 emissions manageable. This strategy will help Stellantis remain competitive in the evolving automotive landscape, avoiding fines and maintaining compliance with tightening EU regulations. The approach may also serve as a blueprint for other automakers navigating the balance between ICE and EV production leading up to 2035. Whether other manufacturers will follow Stellantis' lead in scaling back ICE production remains to be seen.

This shift toward electrification, particularly in competitive markets like the UK, underscores the growing importance of adapting to regulatory pressures while meeting consumer demand for electric vehicles. Stellantis has already started adjusting its product offerings to reflect this change, reducing the price of its Vauxhall electric Frontera to match the hybrid model, a clear signal of its commitment to the EV transition.

As the 2035 deadline approaches, the broader automotive industry faces a critical decision: follow Stellantis' path in gradually phasing out ICE vehicles or continue lobbying for policy changes like BMW, which could shape the future of Europe's automotive market.