Stellantis is reversing course on its electric vehicle strategy in Europe, quietly reintroducing diesel options across multiple models while simultaneously investing in updated internal combustion engine (ICE) technology. The move, confirmed by company executives, signals a shift in response to slowing EV demand and persistent consumer preference for traditional powertrains in certain markets.
At least seven car and passenger van models will once again be offered with diesel engines, according to reports. This comes as Stellantis reassesses its electrification timeline, acknowledging that the transition to EVs is not progressing as rapidly as initially anticipated. The resurgence of diesel is not a complete abandonment of EV plans, however. The company maintains its commitment to electric vehicles but is adapting its strategy to reflect current market realities.
The decision to revive diesel is particularly notable given the increasing regulatory pressure on ICE vehicles in Europe. The upcoming Euro 7 emissions standards, set to be implemented in the coming years, pose a significant challenge for automakers. However, Stellantis appears confident in its ability to meet these standards with its updated diesel engines.
Alongside the return of diesel, Stellantis is also heavily investing in its “Firefly” (GSE – Global Small Engine) gasoline engine family. Emanuele Cappellano, head of European brands at Stellantis, announced that the Firefly engines are being updated to comply with Euro 7 regulations and will continue to be produced beyond 2030. This represents a significant vote of confidence in the Italian-designed engine, which was previously considered to be on the verge of obsolescence within the larger Stellantis group.
The Firefly engine, developed by Fiat and Chrysler, blends technologies from both companies. While a 1.3-liter turbo version was previously sold in the United States (in the Jeep Renegade), Europe and South America have seen a wider range of Firefly applications. Stellantis intends to position the Firefly as a replacement for the Peugeot 1.2-liter PureTech engine, which has suffered from reliability issues related to its wet timing belt design.
The shift towards Firefly engines also has implications for Stellantis’ manufacturing footprint. The Termoli plant in Italy, which produces the Firefly engine, was previously slated for conversion into a battery gigafactory. While that project has been put on hold, the renewed focus on ICE production provides a lifeline for the facility and the Italian automotive industry. The relaunch of the Fiat 500 Hybrid, equipped with a FireFly engine, has already provided a temporary boost to the plant.
The strategic importance of the Firefly engine is underscored by Stellantis’ decision to prioritize it over the PureTech engine, which had become the group’s benchmark petrol engine in Europe since the company’s formation. Previously, former CEO Carlos Tavares had planned to phase out the Firefly in favor of the PureTech. However, the Firefly’s reliability ratings have prompted a reassessment of that strategy.
Stellantis is not simply relying on existing Firefly technology. The company is undertaking technical upgrades to meet the Euro 7 standard, including the implementation of 48-volt mild hybridization and the development of a parallel electrified dual-clutch transmission. These enhancements are intended to extend the Firefly’s lifespan well beyond 2030.
The move to prioritize FireFly and reintroduce diesel engines reflects a broader trend within the automotive industry. Several automakers are tempering their EV ambitions in the face of slowing demand, high battery costs, and infrastructure limitations. While the long-term trajectory remains towards electrification, Stellantis is adopting a more pragmatic approach, recognizing that ICE vehicles will continue to play a significant role in the European automotive market for the foreseeable future.
The decision also reshuffles internal power dynamics within Stellantis, restoring influence to the Termoli division and highlighting the value of Italian engineering expertise. This represents a departure from the previous strategy of powertrain rationalization, which favored the French-designed PureTech engine.
The implications of this shift extend beyond Stellantis itself. The resurgence of diesel and ICE technology could impact the competitive landscape, potentially benefiting other automakers with strong ICE capabilities. It also raises questions about the pace of the energy transition and the future of the European automotive industry.
