DETROIT – CEO Stellantis Carlos Tavares said external pressure on carmakers to move quickly tram potentially threatening jobs and vehicle quality as manufacturers grapple with the higher costs of electric vehicles.
The government and investors want automakers to accelerate the transition to electric vehicles, but the costs are “out of bounds” beyond what the auto industry can sustain, Tavares said. in an interview at the next conference published Wednesday.
“What has been decided is to impose the electrification of the automotive industry which brings about an additional cost of 50 per cent compared to a conventional vehicle,” he said.
“It’s not like we’re passing 50% of the additional costs on to the end consumer because most parts of the middle class won’t be able to afford it.”
Automakers can charge higher prices and sell fewer cars, or accept lower profit margins, Tavares said. Both of these paths lead to a cut. Union leaders in Europe and North America have warned tens of thousands of jobs could be lost.
Automakers need time to test and make sure the new technology works, Tavares said. Speeding up that process “will be counterproductive. It will lead to quality problems. It will lead to all kinds of problems,” he said.
Tavares said Stellantis is aiming to avoid cuts by boosting productivity at a much faster rate than the industry normal.
“Over the next five years, we’ll have to consume 10 percent of our productivity a year … in an industry that’s used to distribution 2 “Improve productivity by 3%,” he said.
“The future will tell us who will be able to digest this, and who will fail,” Tavares said. “We’re putting the industry to the limits.”
Electric vehicle costs are expected to fall, and analysts predict that battery electric vehicles and electric vehicles could reach comparable prices in the second half of this decade.
Like other automakers that profit from combustion vehicles, Stellantis is under pressure from both established automakers such as GM, Ford, VW and Hyundai, as well as startups like Tesla and Rivian.
The later electric vehicle companies were much smaller in terms of vehicle sales and employment. But investors have valued the market for Tesla and Rivian higher than that of owners Jeep car and Ram brands.
That investor pressure is compounded by government policies to cut greenhouse gases emissions. The European Union, California and other jurisdictions have set a target of ending the sale of combustion cars by 2035. The UK has set 2030 as the deadline to switch to all-electricity.
Tavares said governments should shift the focus of climate policy to clean up the energy sector and develop electric vehicle charging infrastructure.
Stellantis, created in 2021 with the merger of French carmaker Peugeot SA and Italian-American carmaker Fiat Chrysler NVTavares said it is on track to reduce costs by 5 billion euros through streamlining its operations.
Tavares has accelerated Stellantis . Electric Vehicle Development, committed 30 billion euros by 2025 to develop new electric vehicle architectures, building the battery factories and invest in new materials and technologies.
On Tuesday, Stellantis said it has invested in solid-state battery startup Factorial alongside the German carmaker. Daimler AG.
“We can invest more and go deeper into the value chain,” Tavares said. “There may be other (investments) in the near future.”
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