A recent verbal clash between Italian Prime Minister Giorgia Meloni and Stellantis CEO Carlos Tavares has brought attention to a new reality – Europe’s once domestically focused automakers are now leveraging the EU’s surplus car factory capacity to secure favorable government deals. Stellantis, formed by the merger of France’s Peugeot PSA, Italy’s Fiat, and Detroit’s Chrysler, holds a dominant position in Italy’s car production. The company is strategically using its excess production capacity to negotiate subsidies and policy support from Rome and other governments.
Stellantis’ European factory capacity utilization dropped to 56% in 2023, providing the company with bargaining power. In the U.S., officials offered subsidies to prevent the closure of a Jeep plant, highlighting Stellantis’ influence. The automaker has allocated more electric-vehicle production to France, emphasizing the profitability of its North American truck and Jeep SUV operations.
Italy, with Stellantis as its sole major automaker, is feeling the impact of production shifts. Despite similar production numbers on paper, France has additional support from Renault and more planned EV models. Italian officials demand increased Fiat production, while Meloni criticizes Stellantis’ decisions as favoring France.
Tavares counters that Stellantis is open to growth but depends on market size. Talks between Stellantis leadership and the Italian government revolve around increased output support. Rome recently introduced a 950 million euro ($1 billion) auto purchase incentive.
As Stellantis focuses on global expansion, discontent in Rome grows. The company’s production strategy emphasizes cost-effective models in low-cost countries, impacting Italy’s traditional strengths. Tensions reflect the challenge of leveraging decisions within a global automotive landscape.
The industry faces increased competition and weakening demand, with Chinese EVs offering lower prices. Italy, home to Europe’s second-largest auto parts industry, is challenged by a significant reliance on combustion-engine technology.
Solutions, according to experts, involve practical negotiations, such as convincing Stellantis to relocate EV-related functions to Turin. The shifting dynamics emphasize the need for strategic discussions rather than nationalistic complaints.
