European car crisis: Stellantis and Renault bosses sound the alarm
John Elkann (Stellantis) and Luca de Meo (Renault) are sounding the alarm: the European car market has been shrinking for five years and could more than halve by 2035. Both executives believe they have three years before painful industrial decisions, and are calling for European regulation to be eased.
In a joint interview given to Le Figaro on Monday 5 May, John Elkann, chairman of Stellantis, and Luca de Meo, CEO of Renault, issued a warning about the future of the European car industry. In their view, current European regulation directly threatens the production of affordable vehicles on the continent and could lead to “painful” industrial decisions in the near future.
A market in free fall
“The European car market has been falling for five years now,” notes John Elkann. A worrying trend which, according to the Stellantis chairman, could see the market more than halve by 2035 if nothing changes.
Luca de Meo drives the point home, highlighting the gap between regulatory expectations and market reality: “The market is not buying what Europe wants us to sell it.” He expresses doubts about the possibility of replacing all current volumes with electric vehicles under present conditions.
Three years to act
The tone is grave when John Elkann states that “the fate of the European car industry is being decided this year”. Without a change of course, he expects difficult decisions about production capacity to be taken within the next three years.
This warning echoes recent plant closures and restructurings already announced by several European manufacturers. In recent years a number of production sites have cut headcount or closed permanently in the face of falling demand and the rising costs of the electric transition.
Europe isolated against global competition
“Every country in the world with a car industry is organising to protect its market. Except Europe,” laments the Renault boss. The observation comes amid heightened trade tensions with the United States and China.
While the United States has put in place the Inflation Reduction Act with massive subsidies for its industry, and China actively supports its car makers, Europe is struggling to define a coherent strategy to defend its industrial interests.
Two visions of the European car industry
Luca de Meo identifies two schools of thought among European manufacturers:
- On one side, Stellantis and Renault, which together represent 30% of the European market and want to build popular cars in Europe and for Europe.
- On the other, the premium brands, more focused on exports.
According to the Renault CEO, European regulation has been dictated for twenty years by the logic of the premium brands, leading to vehicles that are “ever more complex, ever heavier, ever more expensive”.
The appeal to Southern Europe
Faced with this situation, the two executives are appealing to France, Italy and Spain, which are both the main producers and the main buyers of small cars. John Elkann points out that these three countries “together weigh more than Germany” and should therefore make their voices heard.
This alliance of Southern European countries recalls the historic tensions between the different industrial visions within the European Union, with Germany traditionally favouring its premium manufacturers while France, Italy and Spain defend a more accessible car industry.
What are Stellantis and Renault asking Europe for?
Luca de Meo sets out three precise demands for adapting European regulation:
- Apply the new rules only to new models, not to existing vehicles
- Group regulations into “packages” rather than imposing a new one every month
- Create a single point of contact at the European Commission
He also points to the inconsistencies between the different directorates in Brussels: “When one demands the removal of PFAS, the forever chemicals, which is legitimate, the other asks us for battery-powered cars. And there are no batteries without PFAS.”
Contradictions at the heart of the green transition
That last remark highlights one of the major paradoxes of the transition to electric mobility. PFAS (per- and polyfluoroalkyl substances) are chemical compounds that persist in the environment and which the EU is seeking to regulate strictly for health and environmental reasons.
However, these substances are currently used in the manufacture of batteries for electric vehicles, creating a contradiction between environmental objectives and the technological means available to achieve them.
An industry at a crossroads
This appeal from the heads of two of Europe’s largest car groups comes at a critical moment for the industry. The transition to electric, imposed by European regulation that plans to end sales of new combustion vehicles in 2035, requires colossal investment.
At the same time, European manufacturers face fierce competition from Chinese manufacturers, who hold a technological lead and a cost advantage in electric vehicles.
The question now is whether the European Union will hear this appeal and amend its regulation to preserve its historic car industry, or hold its current course at the risk of seeing a significant part of its car production relocate off the continent.
Key figures of the European car crisis
| Indicator | Figure |
|---|---|
| Length of the European market decline | 5 consecutive years |
| Possible contraction by 2035 | More than halved |
| Time before painful industrial decisions | 3 years |
| Stellantis + Renault European market share | 30% |
| End of sales of new combustion vehicles | 2035 |
| Countries called on to weigh in on Brussels | France, Italy, Spain (together > Germany) |