Ο Carlos Tavares, CEO of Stellantis, returns with new statements, to warn about the social and industrial impacts of electric mobility and the need to reduce costs and prices to make pure electric cars accessible to the general public. In particular, his automotive industry and the entire four-wheel industry could find themselves having to move to plant closures if they fail to make the electric vehicle market affordable, especially for the middle class. "A big challenge, if not the biggest, that we have on the electrification roadmap - reiterated the Tavares, during his speech at CES in Las Vegas - is to develop a technology that is affordable for the middle class." Otherwise, "in a few years we will find ourselves with products that cost much higher than conventional ones," which would translate into more expensive vehicles that consumers are unlikely to buy. The industry would therefore risk 'losing the general public and the market would shrink significantly', forcing manufacturers into 'unpopular options' such as plant closures. Moreover, 'if the market shrinks, we don't need so many factories', the CEO warned.
Greater productivity
Η Stellantis has already been forced to make such a choice with the closure of the Belvidere plant in Illinois, but the entire industry is at risk because similar closures could happen anywhere, given the variables of high-cost inflation. Tavares then observed how the only prescription for avoiding the worst-case scenario focuses on a strong productivity improvement that offsets electricity costs that are 40% higher than traditional operations: "The automotive industry has no choice but to absorb the costs associated with technology through further productivity." Therefore, "absorbing the additional costs of electrification and protecting the accessibility of products for the general public is the main challenge for the automotive industry".
The climate impact
"There is a need to focus on electrification, not only for the profitability issue, but also for the planet," the director continued, once again underlining the need for strong growth in electric vehicle sales to produce concrete results against climate change: "To have a significant impact, sales volumes of low emission vehicles must be high, otherwise with low volumes the impact is limited. The production of electric vehicles makes sense to help fight global warming if and only if sales volumes are significant and can play an important role in reducing emissions, but for volumes to be high, the cost of the cars must be affordable."
No job cuts
"If we do not optimise the cost structure, we cannot absorb the additional costs of electrification. If we don't absorb the costs, disposal prices go up and the market shrinks, and if that happens, fewer plants are needed. It's a vicious cycle, a snake biting its tail," Tavares said, stressing that he has no announcement to make about possible job cuts because "we've been working for years to keep businesses healthy. The best way to do that is looking at the financial results of the last ten years. However, it is clear that, in the automotive industry, if you stop working with costs, you will go from Zenith to nadir in just three years."
Without public support
On paper, state support would also be needed for the current transition phase, but there are several difficulties, starting with the precarious state of public finances worldwide. "We can do our job and we're trying to do it to mitigate costs so we can help consumers without putting society at risk, even when that means making unpopular choices," he said. "I would like to see European governments support end consumers with subsidies that go directly into their pockets. It would be a great encouragement for the transition period between now and 2030." However, we know that governments will not be able to support significant subsidies because of the debt issue. This creates an impasse, particularly in Europe, where the cost of debt is now higher than it was years ago due to rising interest rates , meaning that countries will find it difficult to keep their finances in order and avoid further borrowing. This is the situation we are facing in Europe and it is even more acute and clear in Italy."
Biggest problem in Southern Europe
"The risk to be avoided is that of offering electric vehicles at a price that the middle class cannot afford and this is exactly what I am trying to avoid", underlined Stellantis' number one, specifying that "this is the situation not only for Italy, but for the whole of Europe and especially for the countries of southern Europe, such as Italy, France, Spain, Portugal and Greece, which have to deal with a product accessibility issue". On the other hand, according to Tavares, "the case of the Italian car market is very interesting because Italy has the largest B segment in Europe. And this means that the issue of affordability is very important at a time when we are all trying to reduce the cost of electrification."
