Stellantis is shifting its strategy due to slower electric vehicle adoption, committing to continue and enhance diesel engine production while developing hybrids. Despite industry trends, the company will extend diesel production at its Trémery site until 2030. Projections for electric vehicle sales have been revised downward, prompting increased investment in hybrid technologies. Stellantis faces environmental compliance challenges amid leadership changes and has partnered with Leapmotor to expand its affordable electric vehicle offerings in Europe.
A Shift in Strategy for Stellantis
In response to the slower-than-expected uptake of electric vehicles, Stellantis is making a significant pivot in its approach, as reported by Les Echos. The automotive giant has declared its commitment to not only continue producing diesel engines but also to enhance their production alongside the development of hybrid engines. This strategic turn challenges earlier forecasts that envisioned a swift transition to an all-electric future.
Diesel Production Sees a Revival
Despite the automotive sector’s apparent transition away from diesel, Stellantis is defying the prevailing trends. The company plans to extend diesel engine production at its Trémery facility through 2030, a site initially slated for closure this year. This decision aligns with the latest Euro 7 emissions standards, enabling the company to adhere to current environmental regulations.
Moreover, Stellantis is embarking on an innovative project to adapt diesel engines designed for light commercial vehicles for passenger cars. In a surprising move, the group is also exploring the creation of a new, smaller displacement diesel engine aimed at specific market niches.
This strategy is a response to market dynamics, as sales projections for electric vehicles have been significantly reduced. Initially forecasting that 50% of sales would come from fully electric vehicles this year, Stellantis has now adjusted its expectations to just 20%.
In tandem with its diesel revival, Stellantis is significantly boosting its investment in the hybrid vehicle sector. The Termoli plant in Italy will receive substantial funding to produce eDCT gearboxes, specifically for mild hybrid models, reflecting the company’s commitment to diversifying its engine offerings.
Navigating Environmental Challenges
This new strategic direction places Stellantis at a critical juncture concerning environmental compliance. The group faces the challenge of balancing customer demand with stringent CO2 emission regulations. To navigate these complexities, they may need to explore partnerships, similar to their existing agreement with Tesla for CO2 credit acquisitions.
Additionally, Stellantis is currently experiencing a transitional phase following the unexpected resignation of CEO Carlos Tavares in December 2024. Under the interim guidance of John Elkann, the conglomerate, which comprises 15 brands arising from the PSA-FCA merger, continues to pursue its objectives amid these leadership changes.
In September 2024, Stellantis also made headlines by forming a partnership with the Chinese automaker Leapmotor. This collaboration, which includes a 20% stake in Leapmotor, is designed to enhance Stellantis’s portfolio of affordable electric vehicles in Europe, featuring models such as the urban-oriented T03 and the SUV C10.
As Stellantis navigates this transformative landscape, its approach to engine development is undergoing a major shift. While the group initially aimed for rapid electrification, current market conditions are prompting a reassessment of its diesel strategy, all while continuing to invest in hybrid technologies.
It’s worth noting that Stellantis’s strategy concerning electric platforms remains somewhat constrained. The company primarily utilizes the e-CMP platform (and its updated version, e-CMP2), originally developed by PSA, which powers compact models like the Peugeot e-208, e-2008, the Opel Corsa Electric, and the Jeep Avenger. The newly introduced STLA Medium platform is making its debut with the Peugeot e-3008, yet most of the company’s existing electric vehicles are based on modified thermal platforms, including the Fiat 500e and electrified utility vehicles. Stellantis has announced plans for four dedicated electric platforms in the future (STLA Small, Medium, Large, and Frame), but their rollout will take time, which partly accounts for the decision to maintain a robust presence in the thermal engine market, particularly diesel.