Stellantis Halts Electric Fiat 500 Production Amid Lack of European Orders as EV Sales Slow Down

Stellantis, the automotive giant behind brands like Citroën, Vauxhall, and Peugeot, has announced a four-week suspension of production for the electric Fiat 500 model. The decision comes in response to a drop in orders across Europe, reflecting broader challenges faced by carmakers in the electric vehicle (EV) market.

The company confirmed that production will be paused starting Friday, citing difficulties across the European EV market. In a statement, Stellantis explained, “The measure is necessary due to the current lack of orders linked to the profound difficulties experienced in the European electric [car] market by all producers, particularly the European ones.”

Impact of the Global EV Market Slowdown

The production halt highlights the ongoing global slowdown in EV sales, which has forced many automakers to reassess their strategies. The shift in consumer demand has been partly attributed to varying government policies on green incentives, affecting car manufacturers’ ability to push forward with their electric vehicle plans.

The fully electric Fiat 500, a compact vehicle known for its distinctive design, is manufactured at the historic Mirafiori plant in Turin, Italy. This site, established in 1939, holds significant importance as the birthplace of the Fiat brand. However, the plant has seen reduced output in recent years, prompting calls for investment and transformation to meet new market demands.

Investment in Mirafiori and Future Plans

Stellantis has pledged €100 million (approximately £84 million) to upgrade the Mirafiori factory, including plans to introduce a higher-performance battery and launch a hybrid version of the Fiat 500 between 2025 and 2026. The company stressed its commitment to navigating the challenges posed by the market downturn, stating it was “working hard to manage at its best this hard phase of transition.”

Unions have been vocal in urging Stellantis to revitalize Mirafiori, pushing for the production of a new, high-volume, affordable vehicle at the site. In response, Stellantis highlighted the ongoing transformation efforts at Mirafiori, positioning it as a key player in the company’s broader shift toward sustainable mobility. “The Mirafiori complex is undergoing a deep transformation, with the aim of making it a true global innovation and development site, a key choice if we are to meet the challenge of the transition to sustainable mobility to which we are called,” the company added.

Government Incentives and Industry Challenges

Italy has introduced a $1 billion initiative aimed at encouraging drivers to switch to cleaner vehicles, including subsidies for fully-electric cars. However, tensions have emerged between Stellantis and the Italian government over the approach to EV incentives. The dispute underscores broader challenges within the European EV market, as automakers navigate complex regulatory landscapes and varying levels of government support.

Concerns Over a Potential Trade War with China

The European Union’s imposition of provisional tariffs on Chinese EV imports, ranging from 17.4% to 37.6%, has raised fears of a potential trade conflict with China. The EU’s decision, driven by concerns over what it called “unfair” subsidies from Beijing, has deepened divisions within the bloc.

Spanish Prime Minister Pedro Sánchez has called for a reassessment of these tariffs, emphasizing the need for a balanced approach between Europe and China. “I have to be blunt and frank … I think we need to reconsider, all of us, not only member states, but also the [European] Commission, our position towards this movement. We don’t need another war, in this case a trade war,” Sánchez remarked during his recent visit to Kunshan near Shanghai.

China’s Dominance in the EV Market

China continues to dominate the global EV market, with sales surging from 1.3 million in 2021 to 6.8 million in 2022, making up over a third of worldwide EV sales. As the world’s leading producer of electric cars and its largest carbon emitter, China’s role in the global EV landscape remains crucial, shaping market dynamics and influencing policies worldwide.