➤ No-deal Brexit is "lose-lose" for all parties and must be taken off the table, Carlos Tavares says.

➤ The CEO backs moving to zero-emission transport and is enthusiastic about electric powertrains but says the policy framework leaves electric vehicles unappealing and unaffordable for many.

➤ More stringent CO2-cutting rules for small cars are counterproductive as they may make only larger automobiles economically viable.

Carlos Tavares is CEO of Peugeot SA, the France-based parent of the Peugeot, Citroen and Opel/Vauxhall automotive brands. He has been praised for overseeing Opel's restoration to health since its 2017 acquisition from General Motors Co. and Peugeot's steady profit growth. He is also an outspoken critic of Brexit and the European Union's regulatory approach to reducing emissions. In an interview with S&P Global Market Intelligence, Tavares called for the U.K. and the EU to find a path that avoids a no-deal Brexit and warned that a mass shift to electric vehicles will be achieved only with a more holistic approach. The following is an edited transcript of the conversation.

S&P Global Market Intelligence: You've made your position very clear on Brexit — no deal will mean no production of the Vauxhall Astra model in the U.K. Might that position change?

Carlos Tavares: I want to support Vauxhall workers because they are great and they have done great stuff so far to improve the competitiveness of their manufacturing sites. I would like to ask the politicians to find a deal. A no-deal is a lose-lose proposition for everybody. Continental Europe will lose. U.K. citizens will lose. The U.K. government will lose. It is a lose-lose-lose. There is no way anybody is going to win if there is a no-deal, so a no-deal is forbidden.

[U.K. Prime Minister Boris] Johnson, [EU chief negotiator Michel] Barnier, they have to find a solution and that's all. There is no other way. Anything else will be a disaster for everybody as much for the U.K., as much for my employees, as much for continental Europe.

In my company, we would not consider that option. We would say: "Well no, you are bright people, highly scientifically educated, very open-minded people — you go out and find a solution." I think we are not saying this enough. I think the citizens of Europe should tell Mr. Johnson and Mr. Barnier that we do not accept, as European citizens, that you don't find a solution.

When it comes to the environment, we say we are all living dramatic changes in our companies because we don't want to spoil the lives of our kids and our grandkids. With a no-deal, you are going to destroy the lives of the next generation of people in the U.K. and that's not fair, so a deal is a must.

Peugeot is launching an electric variant of the 208, while Opel is making an electric Corsa. Will offering an unfamiliar powertrain in the familiar packaging of long-established models help persuade some hesitant consumers to make the jump to zero-emission electric cars?

If I compare the acceleration,[noise, vibration, harshness], emissions and the overall driving pleasure of an electric vehicle version against an internal combustion engine version, I will conclude as a car addict that the EV is the better car. It's more expensive but it is the better car. We give you the [gasoline] version, we give you the electric version, so you protect your freedom of mobility by selecting yourself what you think is the right powertrain based on your information. We supply the different possibilities and you decide.

If you are enthusiastic about electrified products, why have you been critical of the European Union's push to slash engine emissions and promote electrification?

My No. 1 responsibility is to ensure the sustainability of my company. If I don't want to make red ink with my EVs and not make a machine for unemployment and restructuring, then I have to sell my EVs at a price that protects it from that. But if the price is too high for the middle classes of Europe to buy it, then we are not going to fix the global warming problem because they cannot afford it. So then I'm talking to politicians and saying: "Look, guys, where is the good solution for us here?"

You can only approach this problem on a 360-degree approach where you take care of raw material extraction, energy supply, manufacturing, carbon footprints, etc. ... If you don't look at it from a 360-degree approach — investment for the charging network, the shift of tax revenue from [gasoline] and diesel to electricity — if you don't manage the holistic problem, you are just going to kid somebody. It is not a real solution to the problem. We believe that electrification is a great direction as long as you embrace it on a 360-degree basis and a pragmatic, not dogmatic, one.

Citroen CEO Linda Jackson previously said there is doubt over whether there will be demand in the future for the smallest cars, a segment where European products have traditionally shone. Why?

The current CO2 regulations are extremely penalizing for small cars. This is very interesting because the CO2 regulatory requirements for a car increases as the weight of the car decreases, so the smaller the car, the more stringent the demand on reducing CO2. This means that when you go to the very small cars you have to be zero-emission if you want to be compliant on CO2 but, of course, you blow up the economics. The European regulations are killing the small cars because the economics, of course, don't fly with such an expensive battery.