Further pressure, particularly in the electric vehicle (EV) market, is also coming from Chinese competition, which Tavares said benefited from a further 30% advantage on costs, "This is generating unbearable tension" on the industry, he said, speaking before an Italian parliamentary committee in Rome.
The executive said that energy costs in Italy were too high, double that of Spain, another European country where Stellantis has manufacturing facilities.
"It's a significant disadvantage" said Tavares, who is under pressure to revive the group's results after a profit warning last week.
Stellantis' suppliers, which often are small-sized businesses, will have to bear a share of the cost reduction efforts the group needs to achieve, Tavares said.
He added the market was currently unable to "absorb" EVs unless they had the same prices of traditional petrol vehicles and that state-funded, consistent purchase incentives were the only way to support demand.
Tavares, however, reiterated he was not asking for any changes in the EU carbon emission reduction regulation, including the intermediate carbon targets set for next year, as recently proposed by the European auto lobby ACEA and other manufacturers, including Renault.
"We are ready," he said. "We just demand stability in regulation".
Politicians in Italy have repeatedly criticised Stellantis, whose brands include Fiat, Peugeot, Alfa Romeo and Jeep, for its falling automotive production in the country.
The company's output in Italy is expected to fall below 500,000 vehicles this year, from 751,000 in 2023.
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