The CEO of the maker of Jeeps SUVs and Ram pickup trucks said Wednesday automakers are in the highest of high-speed modes in their shift toward electrification and regulators should focus their efforts on the energy industry and building out charging infrastructure.
Accelerated electrification goals could lead to job losses, Stellantis NV CEO Carlos Tavares said. Electric vehicles represent a 50% increase in cost that would outprice products for the middle class or lead to restructuring of companies that take on those costs, he said.
“My recommendation to those who are making regulations and advocating XYZ is to take care of the energy industry, and now let the automotive industry take care of its own job, which is to bring clean, affordable and safe mobility to our customers,” Tavares said during a virtual Reuters Next conference.
To achieve that goal, Stellantis must digest 10% of productivity per year over the next five years in an industry used to delivering 2% to 3% productivity, he said. Stellantis has committed to investing roughly $35 billion (30 billion euro) into electrification by 2025 of its almost $80 billion (70 billion euro) research and development and capital expenditures budget.
“We will dedicate 30 to the electrification,” he said. “Can we do more if needed? Yes, of course, we can. It’s a matter of setting different priorities for the things we are now right now planning to do.”
The auto industry, however, has been hit with crisis after crisis, from the start of the COVID-19 pandemic last year to a global microchip shortage this year. The latest is news of the new omicron coronavirus variant and whether that will lead to more shutdowns.
“Over the last few years, we have learned how to deal with volatility,” Tavares said. “We know that this is a very chaotic world and very volatile, very unpredictable things which actually happen, and what we have learned from this is that the most important thing for us is to keep a very low break-even point for our business model to make sure that we can digest and accommodate to those unpredictable things.”
Tavares’ comments come after crosstown rivals General Motors Co. and Ford Motor Co. signed a pledge earlier this month at the United Nations Climate Change conference to end sales of vehicles with internal combustion engines by 2040. Stellantis wasn’t a signatory, but Tavares said the company will comply with government regulations and has digested the 2035 ban in the European Union of ICE vehicles, though countries like the United Kingdom have set the deadline sooner in 2030.
“Right now, what has been requested to the automotive industry is putting the automotive industry not only on high-speed mode but possibly on the highest possible high-speed mode,” Tavares said. “If somebody would like to enhance even more the speed, they can; it’s just going to be counterproductive.”
He added regulators should be mindful what the implications of moving up those timetables could be for jobs and access to transportation: “If not, the people who are pushing the limits, they will be morally responsible for the problems that may appear later on.”
The differentiator for Stellantis, Tavares said, is that it has committed to at least $5.6 billion (5 billion euro) in cost savings from the merger between Fiat Chrysler Automobiles NV and French rival Groupe PSA that created the giant transatlantic automaker. The company may be on a faster pace to deliver those cost savings than planned initially.
“Not all the carmakers will make it,” Tavares said of the transition to EVs. “There will be some people that will face big difficulties, but I consider that our company at Stellantis with 5 billion in synergies, we have a better starting position than most of our competitors.”
bnoble@detroitnews.com
Twitter: @BreanaCNoble