Stellantis may ship fewer gas-powered vehicles to US states with strict emissions rules

The logo of Stellantis is seen on a company's building in Velizy-Villacoublay near Paris

By David Shepardson

WASHINGTON (Reuters) -Chrysler-parent Stellantis said on Wednesday it may limit shipments of gasoline-powered vehicles to dealers in states that have adopted California's strict emissions rules.

In a communication to dealers seen by Reuters, the Italian-American automaker said to meet the California emissions rules "we may be compelled to allocate fewer conventional gasoline engine vehicles to California states" and more to other states that have not adopted the rules.

The Stellantis memo noted 13 other states currently have greenhouse standards identical to the California standards and four more will be adopting California standards for future model years.

The California Air Resources Board, which sets emissions rules for the state, did not immediately comment. On Monday, the board asked the U.S. Environmental Protection Agency for approval for it rules adopted in August that would allow the state to ban the sale of gasoline-only powered vehicles by 2035 and require at least 80% electric-only models by then.

The existence of the policy was reported earlier Wednesday by the Delaware Business Journal. Reuters obtained a copy of the dealer memo dated April 27.

"We will continue making available to you all models manufactured for your line makes," the memo said, adding "in some circumstances, we may be compelled to allocate more electrified powertrain vehicles to California states" and fewer to remaining states "in order to comply with the more stringent standards being enforced in the California States."

The memo said the limitations "may impact your ability to order or receive shipments of certain vehicles from time to time, including to fulfill sold orders."

Stellantis added it "may choose not to advertise some trimlines in certain states at certain times, which may impact your ability to order or receive shipments of those trimlines."

A trimline refers to a specific version of a model. They typically range from entry level to more expensive versions.

In July 2019, Ford, Honda, Volkswagen and BMW struck a voluntary agreement with California on reducing vehicle emissions.

Stellantis noted it is investing $35-billion investment to support the introduction of 25 electric vehicles by 2030.

It said it had asked California about joining the agreement with other automaker "that would allow Stellantis to comply with alternative California standards based on our nationwide sales... We will continue to seek a level playing field for our company and our dealers."

Stellantis has previously been forced to pay federal penalties for not meeting U.S. fuel economy requirements including $156 million paid in total for 2016 and 2017 model year vehicles.

(Reporting by David Shepardson; Editing by David Gregorio)