Europe’s Electric Vehicle Woes Are a Lesson for E.V.s Everywhere

Electric cars got top billing at this year’s Paris Auto Show. At the world’s largest such showcase, a central exhibition hall featured an “electric factory” display designed, in the colors of the French flag, to mimic the spine-like assembly lines that churn out electric cars and internal combustion engines. Along the exteriors of those lines were a series of questions answered inside them, where clumps of teens on school trips and car enthusiasts stood by read to hear the answers: Are electric vehicles produced in France? What new professions are created by electric vehicle production? Just outside the exhibition grounds, autoworkers who spend their days in real-world auto factories had a question of their own: Why are so many of them losing their jobs?

A few hundred trade unionists from France, Italy, the United States, and elsewhere gathered in the rain to rail against Stellantis chief Carlos Tavares, the embattled CEO whose global auto group is fending off accusations of mismanagement from workers and investors alike. Late last month, Stellantis issued a profit warning amid lower than expected sales “across most regions.” The company has temporarily suspended production of its fully electric Fiat 500e, citing low sales as it temporarily lays off workers in Italy; Stellantis plans to start producing a hybrid version of the car in 2025 or 2026. Similarly, in the United States, the company has blamed “market conditions” to backtrack on a pledge—enshrined in its contract with the UAW—to reopen and expand an idled plant in Belvidere, Illinois, to include a $3.2 billion battery plan. Stellantis recently announced too that it will expand production of its bestselling, gas-powered Dodge RAM pickups in Mexico. Starting on October 12, it began laying off approximately 1,100 workers from its Warren Truck Assembly Plant in Michigan after ending production of the RAM 1500 Classic pickup there.

On October 18, Stellantis workers in Italy carried out a 24-hour nationwide strike, culminating in a rally that brought an estimated 20,000 people out to Rome’s Piazza del Popolo. UAW members recently authorized their own strike against Stellantis, and are in tense negotiations with the company over unrealized investment commitments. The company has filed nine federal lawsuits against the UAW and two dozen locals disputing the union’s contract-violation claims and right to strike over them, arguing the pledge was always “contingent upon plant performance, changes in market conditions and consumer demand.”

Amid all this, Tavares has tried to paint himself as a stalwart defender of electrification, ready to weather the winds of change even if that proves difficult in the near term. Speaking to the Financial Times at the Paris Auto Show, he warned that slowing the transition to electric vehicles would be “a big trap” and blamed governments for failing to provide adequate incentives to make the switch. Unions on either side of the Atlantic, however, argue that they’re paying the price for Stellantis’s longtime, short-term focus on maximizing profits and executive pay.

“Stellantis has underinvested in this,” i.e., the electric transition, says Maurizio Oreggia, international coordinator for the Italian metalworkers’ union FIOM. He agrees that the Italian government and European Union aren’t doing enough to offer public support for electrification; bolstering those is among FIOM’s top demands. But he also sees Stellantis’s own choices as a key reason why the automaker is falling behind. “This transition is necessary given climate change, if you look at the situation of the planet. But we’ve known we have to do this for many years,” he adds. Instead of reinvesting profits into research and development, improving working conditions, or electrification, “they have distributed profits to shareholders, never to the workers.” Earlier this month, Stellantis announced that it had bought $1.1 billion worth of stock back from shareholders since August. Tavares received a 56 percent pay bump last year. Defending his lavish compensation package in April, Tavares said it was simply part of the contract between himself and the company, “just as there are contracts for soccer players and for Formula 1 drivers.”

The situation facing autoworkers is especially acute in Italy, where anger at Stellantis is pitched. Stellantis was created in 2021 through the merger of the French auto group Peugeot and Fiat Chrysler Automotives. Fiat has long been Italy’s only mass-market automaker, responsible for the bulk of the roughly 1.5 million cars made there as recently as the early 2000s. This year, Italy is expected to produce fewer than 500,000 cars, half as many as it made in 2018 and 250,000 less than it made last year. That decline has been especially hard-felt in the northern city of Turin, the longtime home of “Mamma Fiat” that has seen four car plants close since 1982.

“The trend is downward in all European countries, but in Italy it’s been particularly strong. Various governments never allowed a foreign player to enter the Italian domestic market for car production,” says economist Simone Gasperin. In addition to heavily subsidizing auto plant construction, Italy historically used state-owned enterprises to support its car industry. That included efforts to build out the country’s highway system and offer cheaper gasoline prices via Eni. Through Alfa Romeo, Gasperine explains that the Italian government “was able to inject a dose of competition, which made Fiat more sensitive to things like investing to remain competitive. It was a way to reduce their monopolistic power.” Fiat acquired Alfa Romeo in 1986 amid a wave of privatizations. Since then, successive governments have generally relied on consumer-side subsidies to bolster the auto sector. And whereas the Inflation Reduction Act’s consumer-side E.V. incentives require that cars and their components be made in the U.S. or its trade partners in order to qualify, EU law generally prohibits these kinds of domestic content requirements.

Even the comparatively generous state support for automakers to go electric in the United States can’t make up for their decades spent doubling down on internal combustion engines. Companies have reliably resisted regulatory efforts—like more stringent fuel efficiency standards—that might have spurred innovation. “Stellantis was one of the slowest, if not the slowest, to begin their transition to the next generation of vehicles,” says UAW Region 4 Director Brandon Campbell, who joined the demonstration in Paris and the strike rally in Rome; he first came to the union when he started working at the Belvidere plant in 1994. “They’re paying the price for that, but that is driven by their poor management and their poor decisions.” (For the sake of disclosure, my partner works for the UAW.)

The EU has moved to end the sale of internal combustion engine-powered vehicles by 2035, a decisions now facing fierce pushback powerful parties within the bloc. While such a policy certainly spurs demand for EVs, it’s not at all clear that European companies will be making them. “Europe has already a much more developed EV market than the U.S., but is not prepared to produce most of the EVs that will be sold here,” Gasperin tells me. As Chinese companies roll out affordable EVs at home and abroad, Stellantis and other European automakers have felt pressured to lower prices in order to compete with foreign competition and convince consumers to buy the still relatively limited range of electric models they’re producing. Larger and more expensive cars make for bigger margins, though. In the U.S., where there’s no looming phase-out deadline for gas-powered cars, automakers including Stellantis have seemed content to double down on mostly gas-powered best-sellers like the RAM and Ford F-Series—however limited the demand for those hulking, pricey trucks and SUVs might be elsewhere.

“Manufacturers’ only strategy is to preserve their margins,” Sophie Binet, secretary-general of France’s powerful General Confederation of Labour (CGT), told those gathered outside the Paris Auto Show last week. “Given our salaries, no worker can afford a car that costs 40, 50, 60 or 100,000 euros.” As the factories making those cars close, and companies move production abroad, she quipped that “the CGT project is simple: a small economical electric vehicle entirely manufactured in France, which could be sold for around 15,000 euros.”