The uncertain transition to electric vehicles in Italy and the real impact on the supply chain and employment: the case of the Stellantis plant in Melfi

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Résumé:

For some years now, the Italian automotive sector has been in the grip of a profound crisis, closely linked to the performance of its sole and main manufacturer, the former Fiat group now Stellantis, which has progressively scaled back investment and significantly reduced employment in anticipation of the shift to electric vehicle production. In reality, in the absence of significant investment in electric cars, what has occurred is a sharp reduction in the production capacity of its Italian plants.

Stellantis’s production of electric vehicles in Italy has, in fact, been limited in recent years to the production of the Fiat 500e at the Mirafiori plant. Unsatisfactory market results led to a gradual revision of production plans, to the extent that by the end of 2025 production of a hybrid version of the same model had begun, whilst the new 500e project was postponed until the coming years.

The other challenge that the group, led at the time by Tavares, had decided to tackle was the launch of production of exclusively electric models at the Melfi plant, as agreed in the trade union agreement of June 2021. The Melfi plant was due to produce up to four fully electric models from 2024, completely replacing the production of the internal combustion and hybrid models still in production at the time (Jeep Renegade, Fiat 500X, Jeep Compass). This investment programme, in addition to suffering delays in its implementation, has been completely revised in recent years, with the result that hybrid powertrains will continue to dominate the plant’s production, at least for the next few years.
However, all this has already had a significant impact on employment levels, which have fallen drastically in Italy and particularly in Melfi, with the loss of 2,500 jobs. The result is that, under the pretext of labour savings required for the assembly of electric vehicles, the entire group has reduced its workforce by 15,000 in Italy, falling to fewer than 40,000 employees (mirroring what has happened in France). However, Stellantis’ industrial situation in France is not comparable to that in Italy, not only due to the presence of the former Faurecia but also because of the investments made there in the conversion of plants now dedicated to the production of batteries and electric motors, whereas in Italy, in addition to the reduction in volumes and production capacity, the Termoli gigafactory project has been definitively scrapped and, in the meantime, the group has sold off Magneti Marelli and, more recently, Iveco and Comau.

The consequences for the supply chain have been significant, not so much due to the transition itself towards the production of electric vehicles (the only electric vehicle currently produced in Melfi is the DS8), but rather due to the overlap between the suppliers of the former PSA and the former FCA and the loss of favourable conditions for companies based in Italy, given that logistics costs have been completely revised, leading to an increase in imports from abroad. The case of the Melfi plant and its first-tier supply chain is particularly emblematic in this regard. Ultimately, being located on-site no longer constitutes an advantage, unlike in the past.

This paper will be structured as follows: after a brief introduction to the topic of the transition to electric vehicles in Italy, with reference to the supply chain, and an overview of Stellantis’ Italian plants, it will focus primarily on the case of the Melfi plant and its tier-one suppliers in order to highlight the state of investment and the actual impact in terms of employment and the supply chain. In other words, a significant question remains open, one that may be clarified in the forthcoming business plan due in May this year: namely, the prospects for electric vehicle production in Italy, particularly following the cancellation of the Termoli gigafactory, given that the batteries for both the 500e and the DS8 were imported from abroad (and in any case not from France).