Stellantis Halts Electric Fiat 500 Production Amid Weak Demand

Stellantis has announced a temporary suspension of its production of the fully electric Fiat 500 due to declining demand in the European market. The suspension will last for four weeks as the automaker navigates fluctuating green incentives and inconsistent government policies.

"This measure is necessary due to the significant challenges faced by all producers in the European electric car market, particularly European manufacturers," Stellantis said in a statement.

Production will cease starting Friday, with the company focusing on strategies to adapt to the evolving automotive industry landscape.

In response to these challenges, Stellantis has announced a US$110 million investment to upgrade the Fiat 500 model. This investment will prioritize the development of a high-performance battery, paving the way for the production of a hybrid version of the vehicle, which is expected to hit the market between 2025 and 2026.

The Fiat 500, a symbol of the brand's heritage, is manufactured in Turin at the Mirafiori plant, a facility that has long been central to the company’s operations.

"The Mirafiori complex is undergoing a major transformation, aiming to become a global innovation and development hub, a critical step in meeting the challenges of the transition to sustainable mobility," the company said in a statement.

Employees at the Mirafiori plant have already experienced several periods of temporary layoffs in 2024 due to low demand and delays in the Italian government's implementation of eco-bonuses for electric vehicle purchases. These incentives, designed to promote the adoption of cleaner vehicles, were not introduced until June, adding further uncertainty to an already difficult market.

Italian labor unions have also called for the revitalization of the Mirafiori site, urging Stellantis to boost production by introducing new, affordable vehicle models. The plant, which also produces Maserati vehicles, has faced declining output in recent years.

The production halt comes amid rising tensions between Stellantis and the Italian government, led by Prime Minister Giorgia Meloni. The government has criticized the automaker for shifting production to lower-cost countries, potentially jeopardizing its commitment to Italian plants.

In 2023, Stellantis increased its vehicle production in Italy by 9.6%, reaching nearly 752,000 units. However, the company has pledged to further increase production to one million units by 2030—a target not achieved since 2017. This goal is part of an agreement with the government, which has been pushing Stellantis to maintain a strong manufacturing presence in Italy.

Despite these commitments, the first half of 2024 saw a reversal of these gains, with Stellantis' production in Italy declining by 25.2%, totaling just over 303,500 vehicles, according to the FIM-CISL labor union. Excluding commercial vehicles, the drop was even more pronounced at 35.9%, highlighting the challenges the company faces in maintaining its production targets amid weakening demand.