Detroit — The chief operating officer in North America for the maker of Jeep SUVs and Ram trucks says the automaker’s break-even point is below 30% of revenue in the region.
Stellantis NV CEO Carlos Tavares has emphasized the automaker’s goal to keep its overall break-even point below 50% to make the transition to a sustainable tech mobility company and weather economic downturns as signs points to changing demand patterns for pricey pickups and other vehicles. From energy efficiencies to its supply chain costs and production quality, Stellantis has emphasized cost-cutting measures over years to get to that level, COO Mark Stewart said on Monday at the Automotive News Congress.
“We are in a very good position for recessionary time in terms of the ability to weather through that,” Stewart said.
He emphasized that isn’t through layoffs, though the company has offered a couple rounds of buyouts to white-collar employees and has made shift and job cuts at plants like in Belvidere, Illinois, because of the global microchip shortage. He pointed to the use of more efficient lighting in its facilities and a 5% gain in efficiency with more vehicles produced as examples of steps taken.
North America’s break-even point “means we can weather some tough storms, that as a company, we could weather that many storms in the past, so I feel very good about our ability to get through this and our ability to really be able to convert,” Stewart said. “The devils in the details, and we’re in the details every day, making sure that it’s affordable on the customer end and that it’s going to be profitable for us.”
Some moves, such as requiring North American suppliers to carry over any cost reductions to Stellantis, were unpopular with its vendors, resulting in a backlash and Stellantis retracting that decision. It’s since brought in new purchasing leadership, and Stewart said he feels those relationships are moving in a better direction.
“This was one of the areas of the merger,” Stewart said, referring to the 2021 marriage between Fiat Chrysler Automobiles NV and French automaker Groupe PSA to create Stellantis, “as things came together, and we were a little far too centralized and too remote operational with it.
“… We’ve spent a lot of time working to repair some relationships that were pretty tense. And in these times, things are going to be tense, but then it gets productive, working together, finding solutions so that we can all learn together. And this can’t be a win or lose.”
Stellantis plans to roll out 25 battery-electric models in North America by 2030 that Stewart has said could represent up to 53% of sales. He pointed to the EVs that Stellantis sells in Europe, saying they are profitable and North America is expected to follow. The goal is to grab greater market share and profitability than it has with its internal combustion engine vehicles.
Stellantis doesn’t sell any EVs in North America yet, though the first ones, including the Ram ProMaster commercial van, are expected next year. It does have plug-in hybrid offerings, which Stewart said likely will continue based on the company’s ability to comply with carbon emission and fuel economy regulations. The platforms for those hybrids are flexible to accommodate full EVs, too.
“As we get to the end of the decade, there will still be some places” for hybrids, he said. “But as full BEVs become more affordable, then naturally things are going to move, and as more charging networks get in, so people don’t have the range anxiety, can afford to buy them, I think we’ll see that.”
To produce those vehicles, Stewart said “there is a sense of urgency” to break ground on a third battery manufacturing plant in the region. The company already has announced plans for facilities in Windsor, Ontario, with LG Energy Solution and in Kokomo, Indiana, with Samsung SDI.
“By the time we get to the start of 2026, we’re going to need that next battery plant,” Stewart said, if the market remains strong. “We’re actively engaged with many states at this time.”
Stewart previously said Gov. Gretchen Whitmer and the Michigan Economic Development Corp. would be a part of those conversations. He says conversations remain ongoing with traditional as well as new players and that despite previously stating he expected the United States to be the likely place of the third, Canada still appears to be in play with Prime Minister Justin Trudeau and François-Philippe Champagne, the minister of innovation, science and industry, emphasizing they will be competitive. Stewart says a plant must be announced before the second quarter to keep the timeline on track.
“Everyone is in the running,” Stewart said. “We feel very confident that we will see (Canada) being competitive, because it still goes back into the whole USMCA itself, Mexico, U.S. and Canada. We can’t have an imbalance there. I feel confident that governments will come together and get that on a level playing field.”
Those joint-venture battery plants could be organized by the United Auto Workers (or Unifor, Canada’s autoworkers union, if a plant is sited there), a decision on which Stewart says Stellantis will be neutral. The UAW has stressed the significance of incorporating those locations into its master agreement with Detroit’s three automakers to have comparable wages and benefits as other autoworkers.
Because Stellantis isn’t a majority shareholder in the JVs, however, “it’s really hard to put (that) into the master agreements,” Stewart said.
He emphasized the goal is to bring along everyone in the transition to EVs, though that may not always be at the same pay level and may require additional training. The automaker is looking at producing more parts for its vehicles such as the electric drivetrain motors. Some of that more technical work may justify higher compensation, Stewart said.
bnoble@detroitnews.com
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