By Joseph White and Aishwarya Nair
Chrysler parent Stellantis NV Chief Executive Officer Carlos Tavares said on Thursday that more auto plant closures will happen if high prices for electric vehicles (EV) cause vehicle markets to shrink from pre-pandemic levels.
Automakers will risk losing pricing power as chip supplies recover, Tavares said at the CES technology trade show in Las Vegas.
The comments come as lack of affordability looms over the U.S. EV market at a time when top EV makers are raising prices amid high inflation.
More U.S. consumers want to buy an electric vehicle but are concerned about rising prices, a survey by consulting firm Deloitte showed on Wednesday.
“Nearly 7 in 10 prospective EV buyers in the United States expect to pay less than $50,000 for their next vehicle,” according to the survey conducted between September and October 2022.
Stellantis said last month it would indefinitely idle an assembly plant in Belvidere, Illionois, citing high EV costs. Tavares told reporters said similar actions “will happen everywhere as long as we see high inflation of variable costs.”
The auto industry must absorb 40% higher costs for EVs, he added.
The company had flagged that increasing costs related to the electrification of the automotive market as the most impactful challenge affecting the auto industry.
“If the market shrinks we don’t need so many plants,” Tavares said. “Some unpopular decisions will have to be made.”
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