FCA Threatens to Trim Spending in Italy if Car Taxes Rise

Fiat Chrysler Automobiles NV tells Italy’s government that is may revise its plans to spend more than €5 billion ($5.7 billion) in Italy if the country approves higher taxes on piston-powered vehicles, Automotive News Europe reports.

FCA announced last month that it would make the investments through 2021 to add 13 new or updated models to its underutilized Italian factories in Melfi, Mirafiori and Pomigliano. Many of the new models will feature more efficient electrified powertrains.

Italy’s lower house approved a budget amendment last week that would subsidize low-emission vehicles by as much as €6,000 ($6,800)—but also impose a surcharge as much as €3,000 on cars equipped with conventional gasoline or diesel engines.

Unions and auto industry groups warn that the scheme will hurt sales and disrupt the auto industry’s supply chain. The populist Five-Star Movement political party, which supports the measure, has vowed to adjust the plan to avoid “damaging or causing a shock to companies’ industrial plans.”

ANE says one option may be to rework the proposed tax to exclude cars with small-displacement engines.