Stellantis CEO gives up against Tesla?

[PAPAB]

From Yahoo:
But wait! There's more! In a more significant development today, Reuters is reporting that the CEO of Tesla rival Stellantis (NYSE:STLA) is not at all certain that his company -- or any company -- can profitably compete with Tesla in EVs.
The costs of transitioning from gas-powered cars to electrics are "beyond the limit" of what car makers or car buyers can pay, warns Stellantis CEO Carlos Tavares. Building an EV costs Stellantis 50% more than building a "conventional vehicle," laments the CEO. And "there is no way we can transfer 50% of additional costs to the final consumer because most parts of the middle class will not be able to pay."

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[John K]

From Yahoo:
But wait! There's more! In a more significant development today, Reuters is reporting that the CEO of Tesla rival Stellantis (NYSE:STLA) is not at all certain that his company -- or any company -- can profitably compete with Tesla in EVs.
The costs of transitioning from gas-powered cars to electrics are "beyond the limit" of what car makers or car buyers can pay, warns Stellantis CEO Carlos Tavares. Building an EV costs Stellantis 50% more than building a "conventional vehicle," laments the CEO. And "there is no way we can transfer 50% of additional costs to the final consumer because most parts of the middle class will not be able to pay."

Positioning for a handout? Or, trying to delay transition to EV?

Didn’t know I had my pessimism hat on.

 

[FutureBoy]

Stellantis CEO says EV cost burden is 'beyond the limits' for automakers
By Joseph White
3 minute read

DETROIT, Dec 1 (Reuters) - Stellantis NV (STLA.MI) Chief Executive Carlos Tavares said external pressure on automakers to accelerate the shift to electric vehicles potentially threatens jobs and vehicle quality as producers struggle to manage the higher costs of building EVs.
Governments and investors want car manufacturers to speed up the transition to electric vehicles, but the costs are "beyond the limits" of what the auto industry can sustain, Tavares said in an interview at the Reuters Next conference released Wednesday.

"What has been decided is to impose on the automotive industry electrification that brings 50% additional costs against a conventional vehicle," he said.

"There is no way we can transfer 50% of additional costs to the final consumer because most parts of the middle class will not be able to pay."

Automakers could charge higher prices and sell fewer cars, or accept lower profit margins, Tavares said. Those paths both lead to cutbacks. Union leaders in Europe and North America have warned tens of thousands of jobs could be lost.

Automakers need time for testing and ensuring that new technology will work, Tavares said. Pushing to speed that process up "is just going to be counter productive. It will lead to quality problems. It will lead to all sorts of problems," he said.

Tavares said Stellantis is aiming to avoid cuts by boosting productivity at a pace far faster than industry norm.

"Over the next five years we have to digest 10% productivity a year ... in an industry which is used to delivering 2 to 3% productivity" improvement, he said.

"The future will tell us who is going to be able to digest this, and who will fail," Tavares said. "We are putting the industry on the limits."

Carlos Tavares, Chief Executive Officer and Chairman of the Managing Board of PSA Group, attends the Tomorrow In Motion event on the eve of press day at the Paris Auto Show, in Paris, France, October 1, 2018. REUTERS/Regis Duvignau//File Photo

Electric vehicle costs are expected to fall, and analysts project that battery electric vehicles and combustion vehicles could reach cost parity during the second half of this decade.

Like other automakers that earn profits from combustion vehicles, Stellantis is under pressure from electric vehicle maker Tesla Inc (TSLA.O) and other pure electric vehicle startups such as Rivian (RIVN.O).

The electric vehicle companies are far smaller in terms of vehicle sales and employment. But investors have given Tesla and Rivian higher market valuations than the owner of the Jeep SUV brand or the highly profitable Ram pickup truck franchise.

That investor pressure is compounded by government policies aimed at cutting greenhouse gas emissions. The European Union, California and other jurisdictions have set goals to end sales of combustion vehicles by 2035. The United Kingdom has set 2030 as the deadline for going all-electric.

Tavares said governments should shift the focus of climate policy toward cleaning up the energy sector and developing electric-vehicle charging infrastructure.

Stellantis, created in 2021 with the merger of French automaker Peugeot SA and Italian-American automaker Fiat Chrysler NV, is on track to deliver 5 billion euros in cost reduction through streamlining its operations, Tavares said.

Tavares has accelerated Stellantis' electric vehicle development, committing 30 billion euros through 2025 to developing new electric vehicle architectures, building battery plants and investing in raw materials and new technology.

On Tuesday, Stellantis said it had invested in solid-state battery startup Factorial alongside German automaker Daimler AG (DAIGn.DE).

"We can invest more and go deeper in the value chain," Tavares said. "There may be other (investments) in the near future."

 

[Crissa]

If you don't know how to build something, of course it costs more.

But yeah, it sounds like they're admitting they can't do it.

-Crissa

 

[FutureBoy]

So I go back and forth about this competition thing.

On the one hand, I get that the legacy makers think they can't build EV's as efficiently as ICE and this statement of a 50% higher cost kind of points to that.

At the same time though, Tesla started from scratch and build EVs that are not only competitive on price but actually better performing, safer, cheaper to maintain, and more profitable than ICE.

So it makes me wonder. It's probably too late at this point but what is stopping the legacy makers from just starting a new subsidiary and building from scratch to develop something along the lines of Tesla. Yes, they will have to compete for engineers, have to re-develop a lot of software, etc. But in general, greenfield software development tends to be much easier than brownfield modification to make it do something that was never conceived of in the first place. In many ways, Tesla vehicles are just computers on wheels. And I admit that the legacy automakers are certainly not software houses. But with the legacy auto cash, it seems like they could have funded (possibly still fund) a software machine on wheels.

Now that doesn't at all address the issues of existing laws and contracts. For instance in regards to dealerships, unions, etc. But the idea that an EV costs 50% more to build seems like a disproven argument by Tesla.

 

[Bill906]

Positioning for a handout? Or, trying to delay transition to EV?

Prepping public for outrageous prices?
Introducing the new, all Electric, Dodge Neon. Only $199,999!

Stellantis: We warned you it was going to be expensive.

 

[John K]

EV really is not that hard. Forget the supply chain bubble.

partner to obtain 3rd party quality batteries (granted, batteries are challenging)
electric motors are easier with existing tech
No frills redesign of existing models
Forget software for auto drive, make simple
Hit the market with the “25k” version

Use proven vehicle model designs. Use proven electric motors. Negotiate battery deal, you are years too late because nobody forced you years ago.

Release a 200 mile range simplified EV and leverage previous model quality to entice purchase. Also make the battery easier to swap out to help reduce the cost. Offer a battery maintenance agreement or insurance to ease customer fear and develop new revenue stream while not trying to invalidate any claims.

There is value in this high level concept, yes to challenges. If the manufacturers stop complaining and stop sticking out their hand, they could get to work.

 

[John K]

Prepping public for outrageous prices?
Introducing the new, all Electric, Dodge Neon. Only $199,999!

Stellantis: We warned you it was going to be expensive.

I can’t like you statement even though agreeing, I can’t be angry at the statement because I am angry at the manufacturers who are resting on their heels. So you get halfway ?

 

[John K]

Too much inertial has been built in the automotive industry. Tesla is going lightning fast in comparison even though from our perspective, they are slow to CT production.

 

[Crissa]

Yeah, other companies did it, so what he's really admitting is that they've done no planning and should be liquidated by a battery company.

-Crissa

 

[GnarlyDudeLive]

My thoughts: The OEM's that are already in *DEEP* debt are having issues being able to spend the money needed to fund a complete retool of what would be needed in order to actually compete. I can imagine its hard to ask for money when your preexisting strategies based on financials look like failures when you already had everything in place to succeed. What makes a lender comfortable loaning out tens of billions to a company that is currently failing and doesn't begin to have the talent, knowledge or resources to compete in the new era?

 

[Tinker71]

Too much inertial has been built in the automotive industry. Tesla is going lightning fast in comparison even though from are perspective, they are slow to CT production.

Ford and Volkswagen are making a valiant effort. GM maybe. A lot of talking going on. It is going to be very difficult for the big ice manufactures to transition, they are essentially running 2 companies at once and killing off half. I don't envy them at all. Many communities rely on those plants and jobs. The more I think about it, I am fine with the union addition on the EV tax credit. Maybe the government helps out with double write offs of the old technology if they embrace the change. IDK.

This is also a once in a generation opportunity to claw back a % or 2 of manufacturing lost.

 

[Crissa]

Those building battery factories are planning to be major players.

Those who aren't, are planning on not being major players.

-Crissa

 

[Dids]

EV really is not that hard. Forget the supply chain bubble.

partner to obtain 3rd party quality batteries (granted, batteries are challenging)
electric motors are easier with existing tech
No frills redesign of existing models
Forget software for auto drive, make simple
Hit the market with the “25k” version

Use proven vehicle model designs. Use proven electric motors. Negotiate battery deal, you are years too late because nobody forced you years ago.

Release a 200 mile range simplified EV and leverage previous model quality to entice purchase. Also make the battery easier to swap out to help reduce the cost. Offer a battery maintenance agreement or insurance to ease customer fear and develop new revenue stream while not trying to invalidate any claims.

There is value in this high level concept, yes to challenges. If the manufacturers stop complaining and stop sticking out their hand, they could get to work.

Good plan.... that's what all the Chinese EV are. No frills 25k.

 

[Klaxon]

Stellantis =>

???

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