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DETROIT -- Stellantis CEO 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 EVs, 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 percent additional costs against a conventional vehicle," 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 percent productivity a year ... in an industry which is used to delivering 2 to 3 percent 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."


EV 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 EV maker Tesla and other full-electric vehicle startups such as Rivian.
The EV 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 UK 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 is on track to deliver $5.7 billion in cost reduction through streamlining its operations, Tavares said.
Tavares has accelerated Stellantis' EV development, committing $34 billion through 2025 to developing new EV 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 Daimler.

"We can invest more and go deeper in the value chain," Tavares said. "There may be other (investments) in the near future."
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Some of your competitors seem to be doing it, Carlos.

Good luck with your job when the board sees GM & Ford’s performance in the EV space in three years!
The operative words in your post are "seem to be". It's early yet and the legacy automakers have hurdles that the startups don't. Between the unions, retirees, shuttering of plants, calls for profits in every quarter and the potential for high costs of failure (recalls) the problems may only have started for them.

Only time will tell how it pans out.
 

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The operative words in your post are "seem to be". It's early yet and the legacy automakers have hurdles that the startups don't. Between the unions, retirees, shuttering of plants, calls for profits in every quarter and the potential for high costs of failure (recalls) the problems may only have started for them.

Only time will tell how it pans out.
Yep, Carlos isn't saying anything Jim Farley and Marry Barra aren't thinking. What's encouraging is that Carlos isn't using this as an excuse not to invest in EVs.
 

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The car industry will ultimately resemble the commercial airline industry OR the automobile coach building industry of the early 20th century. A handful of manufacturers will master the production of software, batteries, drivetrains, and platforms. The car brands that we know today, and likely many new ones, will order the rolling technology platform from these suppliers, and mount their brand specific “interface” to these platforms. Fisker is currently operating this way. Honda will be relying on GM in a similar relationship for EV CUVs. Ditto Subaru and Toyota. Eventually, self driving ride share pods will even make the brands insignificant. You might order up a “luxury” pod, for date night, but luxury might be associated with a non automobile brand by then. “Ritz-Carlton” might be a credible brand for a luxurious living room on wheels pod, in the future, vs BMW.
 

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Carlos isn't using this as an excuse not to invest in EVs.
Versus what? Sticking with ICE and then not being able to sell cars in various countries in the coming years? Seems like half of the executives from established companies have openly criticized some aspect of the move to EVs over the last 2-3 yrs. So this latest criticism is not really a big deal or surprise. These behemoth companies that are forced to adapt quicker than normal to market pressures are of course going to balk. Wide-scale adoption of new(er) technology is never cheap and when your margins are razor thin to begin with, complaining is to be expected. Some combination of internal efforts, shared technologies between companies, and potentially some government incentives will see these big companies through this transition time. And to be honest, if the established brands are too big and slow to adapt as quickly as necessary, plenty of start-up companies are ready to capitalize on such weakness.
 

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And to be honest, if the established brands are too big and slow to adapt as quickly as necessary, plenty of start-up companies are ready to capitalize on such weakness.
Exactly 1 company has been able to make EVs as a startup in any sort of reliable volume. And everyone has their favorite criticisms of that guy and the way he does business.

The idea that “well if GM/F/Toyota/VW can’t make EVs, Rivian and Lucid and Fisker will” is just laughable. Have fun on that wait list.

This reminds me of that old law where some percentage of cars sold in CA had to be EVs by year 2000 or something, which was eventually pushed and pushed and then scrapped when the reality hit that no one could do it.
 

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Carlos just wants to sell more Hellcats.
 

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A handful of manufacturers will master the production of software, batteries, drivetrains, and platforms.
This is the direction I expected Tesla to go in but they have stuck ith building their own cars, often poorly.

Imagine if they sold their "skateboard" to a Ford or Stellantis to build a better vehicle upon? Would have been pretty cool.

As for the original article, I'm sure he's just angling for some EV Development money from the US, EU, UK, etc. Governments, the same as everyone else is doing behind the scenes. No reason not to push for it as long as World Governments are making big decrees about "EV only by X year or else". (or else what?)
 
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Exactly 1 company has been able to make EVs as a startup in any sort of reliable volume. And everyone has their favorite criticisms of that guy and the way he does business.

The idea that “well if GM/F/Toyota/VW can’t make EVs, Rivian and Lucid and Fisker will” is just laughable. Have fun on that wait list.

This reminds me of that old law where some percentage of cars sold in CA had to be EVs by year 2000 or something, which was eventually pushed and pushed and then scrapped when the reality hit that no one could do it.
dats a Bingo

its also like the emissions projection in the Obama era.

Let's just make a list of all the EV companies who can hold their own weight in sustainable profits.
I don't feel many comprehend the magnitude OE's pay in warranty cost when you get into these production volumes.
Making automobiles is extremely complicated, its crazy expensive with very little profit margin.
 

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The car industry will ultimately resemble the commercial airline industry OR the automobile coach building industry of the early 20th century. A handful of manufacturers will master the production of software, batteries, drivetrains, and platforms. The car brands that we know today, and likely many new ones, will order the rolling technology platform from these suppliers, and mount their brand specific “interface” to these platforms. Fisker is currently operating this way. Honda will be relying on GM in a similar relationship for EV CUVs. Ditto Subaru and Toyota. Eventually, self driving ride share pods will even make the brands insignificant. You might order up a “luxury” pod, for date night, but luxury might be associated with a non automobile brand by then. “Ritz-Carlton” might be a credible brand for a luxurious living room on wheels pod, in the future, vs BMW.
That's a very interesting scenario since it does mirror another industry (for those unaware, none of the major aircraft companies make engines) and further, the idea of having a coach builder that puts their coach on top of somebody else's drivetrain is actually how the auto industry started. It would be a very interesting full circle if a couple companies became the platform makers and all the brands were just the ones designing the body and interiors, like the old days.
 

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I'm sure the big 3 we're saying the same about smog controls. Meanwhile, Honda existed

Atmosphere doesn't give a **** how hard it is to transition away from fossil fuels. Yeah it's difficult but it seems easier in the long term than the alternative

Stop whining and get to work

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$50B to $65B and climbing for vag and their target is clear-- 70% of all vehicles sold by 2030 on forward will be some variation of a BEV (as their lineup).
 

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I'm sure the big 3 we're saying the same about smog controls. Meanwhile, Honda existed

Atmosphere doesn't give a **** how hard it is to transition away from fossil fuels. Yeah it's difficult but it seems easier in the long term than the alternative

Stop whining and get to work
That was a simple refinement of design and this is an order of magnitude more complicated than that.

Even their manufacturing facilities they have won't work without basically gutting them and starting over, but often the tax incentives to build new facilities will be better for them than revamping old places, so expect to see desert towns in some of the places where they build now.

Louisville got lucky, as Ford is revamping one of their plants to go electric and they are breaking ground on a battery plant down in the state somewhere. Only the Ford Truck Plant will continue on for the foreseeable future, and they make Superduty trucks, so they'll get a few more years out of that plant than most before a full revamp is required. That may just be Ford's last gas (diesel) powered vehicle plant.
 

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That was a simple refinement of design and this is an order of magnitude more complicated than that.

Even their manufacturing facilities they have won't work without basically gutting them and starting over, but often the tax incentives to build new facilities will be better for them than revamping old places, so expect to see desert towns in some of the places where they build now.

Louisville got lucky, as Ford is revamping one of their plants to go electric and they are breaking ground on a battery plant down in the state somewhere. Only the Ford Truck Plant will continue on for the foreseeable future, and they make Superduty trucks, so they'll get a few more years out of that plant than most before a full revamp is required. That may just be Ford's last gas (diesel) powered vehicle plant.
American auto factory mismanagement is nothing new. Look up all the closed plants, then compare them with those of the Japanese. Maybe this can be an opportunity to change the laws and incentives to keep using existing factories instead of shutting them down and starting over. I don't see the big 3s resource mismanagement as a legitimate hurdle

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Exactly 1 company has been able to make EVs as a startup in any sort of reliable volume. And everyone has their favorite criticisms of that guy and the way he does business.

The idea that “well if GM/F/Toyota/VW can’t make EVs, Rivian and Lucid and Fisker will” is just laughable. Have fun on that wait list.
You're only talking about current time, which is fairly irrelevant to a large-scale switch over to EVs. The reality is that something has to give. If established car companies can't make it happen by ~2030ish between their own resources, shared resource, and any type of gov money, then people will be driven to the smaller companies. And of course, if no one can realistically meet the demands that various governments have placed on the end of ICE sales in new cars, rolling back the deadline is always on the table. And probably, we'll end up seeing a little of everything at play depending on what country you live in. Of course, there are plenty of pitfalls along the way like infrastructure and supply issues that can derail the most perfect and reasonable of plans. So it's really a complete unknown. I do think it will be quite a bumpy ride for the established companies from this point forward as it relates to doing their best to meet both regulatory and customer demands.
 

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I'm guessing Tavares is including all the capital costs (e.g. cost of retooling, acquiring new engineering expertise, new supply chain costs) in his quote of 50% higher costs. Otherwise I don't see how Fiat 500e costs 50% more than ICE Fiat 500.
 

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Funny that the bots decided yesterday to bump my 10-year-old thread about the future of car ownership for the masses, because this is basically driving at the same issue. Nobody in the US market has yet made an EV that's both affordable and popular. The ones that are relatively affordable are either too compromised, or actively de-emphasized by manufacturers who don't really want to sell too many of them because they're unprofitable. The ones that are popular are very impressive but out of reach for many buyers. (Yes, I know the new-car ATP is like $40K now, but there are still a lot of sales below that number, especially in global markets.)

For markets where very short ranges and very small vehicles are going to be rejected by most buyers, nobody has cracked the nut of building an EV that's a true Corolla/Camry/RAV4 equivalent. I know there are a lot of upcoming products, so we'll see if one or more of them break through. But I do understand where Tavares is coming from. The rhetoric from the biggest EV fans sometimes makes me think of people in the '70s who believed there was a 100-mpg "Fisch Carburetor" design that had been buried by the oil industry to protect their profits. Of course, no such thing existed or was possible. People like the idea of simple solutions that are being kept back from us by shadowy forces, but sometimes solving problems is just hard.
 

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This isn't happening in a vacuum. Pitfalls abound. You can't over produce against insuffcient infrastructure low demand and huge upfrint costs. The guy is telling the truth about upfront capital, it's why you see car comapanies looking for partners and being cautious.

Just because you build EVs it doesn't mean that they will ajutomatically sell. People forget what a gamble the sales still is. Many a good vehcvile has been discontinued for lack of want for what ever reasons.

High dollar, low profit lot rot is the fear. And remember, they're making money hand over fist now with trucks, CUV/SUVs. The incentive to switch will have to be there and now it''s just not.
 

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I'm in tech and am seeing the same thing happen to the legacy players like Cisco as upstart disruptors like Zoom start to take over. Here's what I'm seeing in my industry and what I think we'll see in the auto industry over the next 10 years
  • Legacy players are torn between having to invest in their legacy business to keep it competitive while also investing massively into the new player business
  • Tons of new players all trying to gobble up the customer base of legacy players, advantage to new players who focus on selling one thing which is also the new/next big thing
  • Weak legacy players will be forced to consolidate with other weak legacy players and/or create strategic partnerships with the new players (i.e. white label new player products). IMO this is a slow death for the legacy player.
  • Weak/small new players will be forced to consolidate with other weak/small new players
  • Low stock valuation of legacy players as the market sees the install base of loyal customers/established channels/assets as a negative not a positive
  • High stock valuation for new players as the market sees them as the future and bakes in a ton of growth, unfortunately those initial rallies cool off over months/years as reality sets in
  • The change from old to new tech will be first seen as a dog with a long tail, but will flip faster than expected\
IMO Stellantis is afraid because of the first bullet point and if they don't get their act together quick they'll end up resorting to the 3rd bullet point.
 
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