Monday, October 3, 2022
News Carlos Tavares: «Suppliers will Have to Eat Some of the Costs to...

Carlos Tavares: «Suppliers will Have to Eat Some of the Costs to Keep EVs Affordable»

Stellantis' CEO believes suppliers will have to eat some of the costs involved in the EV transition

The Stellantis giant blew out its first candle just a few days ago and is about to unveil its future plan for all its brands, starting tomorrow when its top executive, Carlos Tavares, will unveil his strategy for the electric shift of the automaker’s divisions formed from the union between PSA and FCA last year.

However, Carlos Tavares believes that this electric shift seen throughout the industry should not be the sole responsibility of carmakers. No, Stellantis’ top man believes that the various suppliers will have to absorb some of the costs related to the technological shift, especially since there is also healthy competition among these suppliers.

In fact, the CEO of Stellantis does not see any way to prevent suppliers from accepting a greater financial burden as Stellantis prepares to launch several electric and plug-in hybrid models around the world.

Tavares has no intention of passing on the monetary premium to consumers, especially with fairly ambitious goals of surpassing 40 percent of its U.S. sales (and surely Canada as well) by 2030. On this point, Stellantis is right: EVs can’t be too expensive, or consumers won’t buy them.

According to him, electric vehicles are 50% more expensive to produce and the company risks losing the middle class by offering a range of electric vehicles that are too expensive.

Tavares’ statement just days before the unveiling of this vision for the future – which will take place tomorrow, March 1 – comes at a rather favorable time for Stellantis, the automaker that posted a net profit of $15.2 billion, while in North America, the profit margin rose to 16.3%, a record especially in the face of FCA’s 10.1% margin in 2020. Also on our continent, adjusted operating profit in 2021 increased 85% over FCA’s 2020 figure to $12.8 billion.

The numbers indicate that Stellantis is doing well, but Tavares still wants to force the various suppliers to tighten their belts so that customers – the middle class in particular – do not have to absorb all the costs of this electric and technological shift.

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