Why Tavares remains all-in on EVs as others retrench
Stellantis Chief Executive Carlos Tavares in February made an intriguing announcement: The Chryslerparent company would remain all-in on electric vehicles , even as competitors scale back and sales growth slows.
“We’re going flat out,” he told analysts on the company’s earnings call.
The 65-year-old’s view on battery-powered vehicles is a drastic change from just a year ago, when he sounded the alarm on the high cost of EVs . Now, Tavares is more bullish, driven by the company’s flexible vehicle platforms and that Stellantis’s EVs are already profitable.
Tavares says the company is staying the course with an ambitious goal it staked out two years ago: to make 50% of Stellantis’s
U.S. sales volume allelectric by
2030 , buoyed by its popular Jeep SUV and Ram pickup brands.
A part-time race car driver, Tavares has always stood out among his peers as an executive who moves to the beat of his own drum.
While Stellantis has sold electric models in Europe the past few years, the U.S. was put on the back burner for some time. Company executives have said the delay gave them time to better understand what U.S. customers want—an advantage when competitors have spent billions of dollars to quickly introduce their first electric models to catch up to market leader Tesla , even as some drivers remain skeptical of the technology .
Stellantis, born in 2021 through the merger of Fiat Chrysler Automobiles and PSA Group, has 14 brands worldwide, including wellknown American names such as Jeep and Ram as well as European makes Opel and Peugeot.
The company is executing an aggressive plan to capture a chunk of the electric-vehicle market: Sell 48 EV models globally by the end of 2024, including eight in the U.S.
Among those are the Fiat 500e subcompact vehicle, which is currently available, and the muscle car Dodge Charger Daytona and Ram 1500 REV pickup, expected to hit dealerships later this year. New advantages Tavares is betting big on his company’s new flexible vehicle platforms. They will give Stellantis an edge, allowing the company to switch between building gas-powered vehicles and EVs based on consumer demand.
These platforms are in essence common structural foundations on which different types of vehicles can be built.
“We are launching at the right time with the right technology and the right products covering several segments of the market,” a company spokesperson said.
But Tavares said he has more than one reason to be more optimistic—raw material costs are falling and the electric-only models Stellantis sells around the world are already profitable. At a time when many automakers are losing money on EVs, launching profit-generating electric vehicles as soon as they come to market is a core tenant at the company, he said.
“People do things if they believe it is going to be profitable,” Tavares said in an interview. “If not, they just drop it.”
Not your typical CEO
Tavares, who ran Peugeot after several years at Nissan Motor , has developed a repuDodge, tation for maintaining sharp metrics to track progress and being hyper-focused on costs. He sometimes flies budget airlines over the private jets favored by other auto executives.
That focus on restraining costs has continued into his tenure at Stellantis, which has maintained double-digit profit margins since its inception in 2021, among the highest in the industry.
The company achieved those marks under Tavares’ watch by reducing its U.S. salaried head count through buyouts and layoffs , and by making moves to sell off some of Stellantis’s biggest real estate holdings, such as its North American headquarters .
Tim Kuniskis , chief executive of Dodge and Ram, recently said Tavares instructed the company’s American brands to not buy any regulatory credits allowed under U.S. law to meet tailpipe emission standards. Fiat Chrysler had relied upon the credit-buying system for years to meet the requirements.
“My guys may think, ‘Carlos is crazy’,” Tavares said, “and that is OK.” But he said buying credits from other automakers only helps competitors and puts Stellantis in a position of weakness.
So far, some automakers have struggled to make money on their EVs . Ford last year lost nearly $5 billion on its electric-car business and projects even bigger losses this year. General Motors has delayed a $4 billion overhaul of a Detroit factory to build electric pickups as well as a self-imposed goal of producing 400,000 EVs over a twoyear period through mid2024.
Tavares, meanwhile, told analysts in the February call that Stellantis’s EVs in Europe are profitable, including a new hatchback offered by the company’s Citroën brand, the e-C3, which is being sold in Europe at 23,300 euros, equivalent to about $25,000. Sell at a profit
For years, Tavares said consumers wouldn’t make a switch to electric models without substantial government subsidies and lower costs, and he routinely chastised regulators for requiring companies to sell more battery-powered cars.
Now, the CEO says the company’s core U.S. brands— Jeep and Ram—are expected to make money on their first retail EVs that go on sale later this year.
Stellantis’s new global vehicle platforms have been touted by executives as a business advantage in recent months. Up to two million vehicles alone can be built on one of Stellantis’s new platforms, called STLA Medium, equal to one-third of the automaker’s total sales in 2023.
These platforms, which contain the basic mechanical components that underpin a car, can be used to not only make battery-only models but also hybrids and those with internal combustion engines.
Kuniskis said at a recent conference that one of the company’s four new vehicle platforms will support a midsize
SUV for Jeep, a two-door muscle coupe for Dodge and a new vehicle for Chrysler— including those powered by gas engines and battery motors.
“That one platform underpins in the short term, eight different, completely, radically different cars for radically different customer profiles,” Kuniskis said. “And in the longer term, it will do even more.”
Tavares said the setup is particularly advantageous as the U.S. and Europe face political elections this year that could upend the regulatory environment for electric vehicles.
If regulators after those elections want fewer EVs, Stellantis can slow down until consumer demand increases, he said. If they want more, it can speed production up.
“I will be in a better position to face that market than if I start to slow down now,” he said.
Growing confidence Other executives have taken a different view, saying a flexible arrangement such as Stellantis’s isn’t the right approach. Developing an EV system from scratch allows for a larger battery—thus providing a longer driving range— and a roomier interior relative to an electric vehicle that was retrofitted from a gas-engine layout, supporters such as General Motors and Volkswagen have said.
Still, Tavares is confident his strategy will be fruitful.
The CEO said the company has enough battery supply secured to support its U.S. ambitions. And the carmaker is benefiting from its longgame approach because of the slowdown in consumer interest, as the continuing narrative has resulted in decreasing total costs to make an EV, Tavares said.
“That has an impact on the raw material price, which means the raw material price is going down,” he said. As a result, affordability for customers should continue to increase, he said.
Pain points persist, Tavares said, and the industry won’t have success selling EVs unless companies continue to drive down costs, increase affordability and build out a robust charging network for drivers.
But even if there are some bumps in the road, he said he believes the electric transition is inevitable. In the coming years, though, Tavares believes the competition will be intense and only a handful of global automakers might survive.
“There will be only five,” he said. “Among those, there will be Stellantis.”
Tavares says the firm is staying the course with an aim to make 50% of its U.S. sales all-electric by 2030