A villain not prone to negotiate wouldn’t give the ultimatum to begin with. If he has the PCs within his ability to kill them and take it, that’s what he’s going to do. If he’s given an ultimatum, the negotiations have already begun.

Now if you provide clues to the party that this guy will follow through with his claims, then they should most likely go along to live. Let them witness the villain having a similar interaction with another similarly equivalent group that ends in THEIR death. That sets the tone for the ultimatum. I’d make sure to give the PCs a solid victory soon after.