Stellantis NV (NYSE:STLA) has issued a warning to the UK government, stating that it will cease vehicle production in the country if the government does not relax its electric vehicle (EV) sales targets.

What Happened: Stellantis, which makes electric vans across brands like Vauxhall, Citroën, Peugeot, Opel, and Fiat, has invested £100 million ($127 million) to convert its Ellesmere Port factory into an electric-only plant.

The company has also expressed concerns about the UK's EV sales targets, which require 22% of new cars to be zero-emission vehicles this year, increasing to 80% by 2030, reported Bloomberg.

Stellantis' UK managing director, Maria Grazia Davino, stated that the current targets are "unsustainable" and could force the company to offer discounts to sell more EVs, potentially leading to a loss of £15,000 per vehicle.

"If this market becomes hostile for us we will enter an evaluation of producing elsewhere," Davino said.

Ahead of the upcoming general election on July 4, both the Conservative and Labour parties have indicated that they will maintain the existing EV sales targets.

Why It Matters: This threat from Stellantis comes at a time when the global automotive industry is undergoing a significant shift towards electric vehicles.

Back in 2021, Stellantis CEO Carlos Tavares voiced concerns about the challenges faced by automotive companies in adapting to the changing times, stating that they were "forced" to invest in new plants and higher production costs for electric vehicles.

Stellantis has been actively working to expand its electric vehicle offerings, with plans to introduce a $25,000 electric Jeep in the US to counter the Chinese EV threat.

However, the company has also faced setbacks, such as a recent recall of over a million vehicles in the US due to rearview camera display issues.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

Photo courtesy: Stellantis