Vauxhall owner Stellantis resurrects diesel cars after taking a £19bn hit from EV sales slump

• e-mail

The parent company of major car brands Vauxhall, Citroen, Fiat and Peugeot says it will resurrect the availability of diesel engines in Europe, after suffering financial pain from its electric vehicle push.

Stellantis will make a dramatic U-turn on its green car strategy, hitting the brakes on the transition to EVs and keeping combustion engines in production for longer, bosses told Reuters.

Earlier this month, the world's fourth-largest car maker confirmed it had taken a £19billion hit from rushing into the EV market too fast for European customers, who remain reluctant to transition to battery-powered models.

As such, it has already started reintroducing diesel engines across its model ranges, adding them as a powertrain option for seven cars and vans across its line-up.

Models like the Peugeot 308 hatchback and the new DS No.4 are now available with diesel engines under the bonnet.

Confirming the change of heart, Stellantis told Reuters: 'We have decided to keep diesel engines in our product portfolio and – in some cases – to increase our powertrain offer. At Stellantis, we want to generate growth; that's why we are focused on customer demand.'

Vauxhall's parent company Stellantis has vowed to resurrect diesel cars following a £19billion hit from its EV strategy

While Stellantis' decision has largely been driven by its own difficulty in convincing consumers to switch to EVs, the EU's relaxing its ban on sales of new petrol and diesel cars has also influenced the move.

In a major climbdown, the European Commission announced in December that car makers will no longer be forced to sell only zero-emissions vehicles from 2035, allowing some combustion-engine models to remain on sale beyond the deadline.

Manufacturers will instead be required to cut car exhaust emissions by 90 per cent - rather than 100 per cent - compared to 2021 levels, in a shift designed to ease pressure on an industry struggling with weak EV demand and rising competition from China.

The reversal followed intense lobbying from German, Italian and European auto giants, who warn they are being undercut by cheaper Chinese imports.

Critics say the move risks gutting one of the EU's flagship climate policies, while supporters argue it is a necessary concession to protect jobs and keep Europe's car industry alive.

A rolling back of environmental targets in the US - Stellantis' biggest market - also shaped its decision to stick by combustion engines.

Last week, President Donald Trump's administration repealed a scientific finding that greenhouse gas emissions endanger human health, eliminating car and truck tailpipe emissions standards.

Models like the Peugeot 308 hatchback (pictured) and the new DS No.4 are - since the end of last year - now available with diesel engines under the bonnet

Stellantis will hit the brakes on its transition to EVs in favour of keeping combustion engines in production for longer, bosses told Reuters

Electric car U-turn 

Committing to diesel for the foreseeable is a monumental U-turn on the original plans for the latter part of this decade.  

In 2021, Vauxhall pledged it would sell only EVs in the UK from 2028. Parent company Stellantis said it would switch exclusively to electric cars in Europe from 2030, with half of its US sales targeted to be electric by the same date. 

However, with customer demand accelerating at a far slower pace than it had forecast, Stellantis, like so many rival manufacturers, has been forced to make significant changes to its EV strategy.

The commitment to retaining diesel engines gives the company a market position to rival fast-growing Chinese rivals, many of which focus heavily on plug-in hybrid petrol cars to supplement EV sales.

Read More

The great EV U-turn: Brands that have ditched or delayed electric car plans due to slow public demand

Diesel vehicles are typically much cheaper to produce and sell, which is seen as a key factor at a time when many buyers are feeling financial pressure and car makers are struggling with rising production costs.

However, the move will buck a decade-long trend that has seen manufacturers shun diesel engines over environmental concerns.

Many abandoned diesel altogether, prompted by environmental targets such as the Zero Emission Vehicle mandate in the UK. 

In 2015, diesel cars made up around half of all new vehicle sales in the UK and Europe. 

However, the 'Dieselgate' emissions cheating scandal, which exposed major manufacturers - notably VW - using 'defeat devices' to dupe official tests, triggered a sharp and lasting decline in demand.

By 2025, diesel's share of new car sales in Europe dropped to just 7.7 per cent, according to figures from industry body European Automobile Manufacturers Association. In contrast, fully electric vehicles accounted for 19.5 per cent of the market.

In the UK, diesels last year accounted for one in 20 (5.1 per cent) of all car registrations, with fewer than 104,000 entering the road, records held by the Society of Motor Manufacturers and Traders show. That's a sharp contrast to the 1.25million sold a decade earlier.

This is largely because the number of new diesel models in showrooms had dramatically depleted following Dieselgate.

Market analysis by online sales platform CarGurus last year revealed that the choice of diesel had plummeted from 167 models in 2020 to just 57 last year.

Its review revealed that just four cars across all Stellantis brands were sold with diesel engines in 2025, down from 26 five years earlier. 

Read More

Diesel's demise: Availability has plummeted by two thirds since 2020 - but one brand still has 16 diesel car options in showrooms today

Chris Knapman, UK editorial director at CarGurus, said the decision to prolong diesel production will 'buck the trend', though said diesel still makes sense for drivers covering long distances or those who need extra pulling power for towing.

This is reflected by a blossoming used car market, with a third of all transactions last year being diesels.  Almost 2.6 millions changed hands during the calendar year.

Identifying this gap in the market, Stellantis is now reversing course to appease driver demand. 

In Europe, where Stellantis sales fell by 3.9 per cent in 2025, after dropping 7.3 per cent the year before, diesel versions of the Opel Astra, Opel Combo van, Peugeot Rifter and the Citroën Berlingo MPVs are returning to showrooms.

The company also confirmed it will continue to offer diesel engines for Alfa Romeo's Tonale and Stelvio SUVs, and its Giulia saloon. The DS7 SUV will also be available with the option of an oil burner under the bonnet to reflect 'sustained customer demand'.

Stellantis chief executive Antonio Filosa said earlier this month: 'The charges announced largely reflect the cost of over-estimating the pace of the energy transition that distanced us from many car buyers' real-world needs, means and desires.

Earlier this month, Stellantis admitted its attempt to switch to greener vehicles had been going too fast for consumers, with a spokesman for the car giant stating: 'That journey continues at a pace that needs to be governed by demand rather than command.'

Stellantis said it was committed to 'freedom of choice' for motorists who preferred to stick with traditional internal combustion engine vehicles rather than moving to purely battery-driven cars.

The company's financial hit from its failed electric transition includes write-offs related to vehicles that have been cancelled or are now expected to sell in 'considerably' lower numbers, as well as charges related to scaling back its EV supply chain and other changes in its operations.

Stellantis chief executive Antonio Filosa said: 'The charges announced largely reflect the cost of over-estimating the pace of the energy transition that distanced us from many car buyers' real-world needs, means and desires. 

'The reset we have announced is part of the decisive process we started in 2025 to once again make our customers and their preferences our guiding star.'

Last year, Stellantis controversially shuttered Vauxhall's 120-year-old Luton factory where diesel-powered vans were being produced, putting some 1,100 jobs at risk.

Staff were offered new roles at its electric van and MPV production site in Ellesmere Port some 180 miles away.

The plant - the first mass-production EV-only factory - opened in 2023 following a £100million investment by the car giant.