Stellantis CEO Thinks EVs Are Too Troublesome

Matt Posky
by Matt Posky
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stellantis ceo thinks evs are too troublesome

Stellantis CEO Carlos Tavares has said that the growing pressures being placed on automakers to shift toward electric-vehicle production are unsustainable and run the risk of the public getting subpar products at decidedly higher price tags. While we’ve seen automotive executives lambast new energy vehicles before, it’s grown rarer as governments around the world have continued incentivizing their existence and investors have been pouring money on startups delivering literally nothing more than the mere suggestion of more electrification.

Tavares’s words come from the Reuters Next conference, running counter to the event’s prevailing narrative of encouraging technological progress and social change. Attendees tend to be political officials, heads of finance, NGO leaders, and business executives sympathetic to the cause. But the Stellantis CEO definitely went off-script when he listed some of the shortcomings of electrification, adding that he felt the costs were “beyond the limits” of what was realistically feasible. It’s his belief that pursuing electrification at the current pace doesn’t take into account the larger financial picture.

“What has been decided is to impose on the automotive industry electrification that brings 50 [percent] additional costs against a conventional vehicle,” he told Reuters in an interview. “There is no way we can transfer 50 [percent] of additional costs to the final consumer because most parts of the middle class will not be able to pay.”

From Reuters:

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 [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.”

While we’ve absolutely seen EV prices falling over the last few years, it hasn’t been at the pace originally assumed by industry leaders and analysts. A couple of years ago, the media consensus was that electric vehicles would reach financial parity with internal combustion cars by 2025. That date now looks to be edging closer to 2030, surrounded by new promises regarding solid-state batteries and novel ways of sourcing the necessary raw materials. Modern EVs are likewise seeing improved ranges, reducing consumer anxiety, and enjoyed a meaningful jump in sales over the summer. But their popularity remains limited to urban hubs where driving distances are consistently shorter and charging stations are easier to find.

For Tavares, this would indicate a need to pump the brakes on pursuing electrification for a moment to double-check whether or not the current plan is actually sustainable. Though it must be said that his company owns Jeep, Dodge, Ram, and a slew of other brands with profit margins that are heavily dependent on larger vehicles that burn liquid fuel.

Like other legacy automakers, Stellantis (a merger between FCA and PSA Group) has spent the last hundred-plus years perfecting one type of automobile that their average customer still prefers. EV startups are the new hotness, with investors ready to bend over backward to shell out funding long before anyone has even vetted their technology. This, combined with mounting government pressure to ban internal combustion, has placed a lot of pressure on the industry. Reuters noted that the European Union and the State of California and set goals to end the sale of combustion vehicles by 2035. But other governments have placed even shorter timelines on their demise, going so far as to actively prohibit what type of powertrains are allowed into select urban environments.

This is being supported by lofty incentive programs and social pressures, with most of the developed world offering large tax rebates to EV shoppers. Meanwhile, industry players that have a vehicle lineup that doesn’t pollute at the tailpipe become eligible to profit off carbon credits while avoiding hefty regulatory fines tied to emissions testing.

Interested in nailing down some social cachet of their own — and desperate not to be left behind — the big boys are dumping billions into development programs just so they can deliver competitive electrified products. The next step is to swap to entirely electrified lineups before vehicle bans take hold or government penalties get stiffer. As a byproduct, they’ll also be able to cut back on their staffing budgets since EVs require fewer human laborers to manufacture.

Stellantis itself has committed to spending 30 billion euros ($33.9 billion USD) through 2025 to develop electric-focused vehicle architecture, establish battery production facilities, and secure the necessary raw materials that need to be mined out of the planet. It’s also streamlining operations (jobs and product) to rattle loose $5.7 billion. This week, it announced that it had invested into a solid-state battery startup in a partnership with Germany’s Daimler. It’s verifiably invested in the future of electrification, though its CEO remains skeptical that the current pathway is the correct one.

Tavares suggested that governments slow down, stop fixating on encouraging manufacturers to build EVs, and focus on making them more appetizing to the public by developing the charging infrastructure essential for their existence. He also stated that the energy sector would need some sprucing up if the shift to EVs is actually going to have a positive effect on the environment. But he maintained that it would be the financial aspects causing the most serious problems, noting that it’s ultimately the public that has to get behind the tax structures currently propping up EV sales and maintain sufficient wealth to actually continue buying them over the next several years.

It’s a sound argument, especially coming from a manufacturer viewed as slightly behind the curve in terms of EV proliferation. But we’ve even heard Tesla CEO Elon Musk discussing the need for robust power grids and sounder subsidizing. Though we’re not expecting any EV-dominant brand to outright poo-poo the global push for electrification as they have the most to gain from it.

[Image: Stellantis]

Matt Posky
Matt Posky

Consumer advocate tracking industry trends, regulation, and the bitter-sweet nature of modern automotive tech. Research focused and gut driven.

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6 of 113 comments
  • Craiger Craiger on Dec 02, 2021

    Why don't more people comment on the government putting its finger on the scales?

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    • Alex Mackinnon Alex Mackinnon on Dec 03, 2021

      Because they should have their finger on the scales. That's their freaking jobs. If a company is causing a society obvious harm, but aren't paying for it they're just going to keep doing it now, aren't they? That's called an externality. If a company can externalise a cost, they're sure as hell going to do it. Air pollution and climate change is an externalised cost. Do you think oil producers and automakers would have removed lead from gasoline if they weren't forced to? Was that an obvious cost to society? Yes. If left up to themselves, they probably would have pulled a book from big tobacco, and simply marketed the concerns away for as long as possible. It's the same shit, all over again. Laissez faire economics don't handle this kind of problem. This is what laws, regulation and government are best at.

  • F6Dave F6Dave on Dec 02, 2021

    There's a lot of talk about how much batteries have improved. But in reality the last major breakthrough was in 1991 when Sony commercialized the lithium-ion battery. For two decades capacity increased by around 8% per year, but that rate has slowed to 5%. There may be promising new technologies out there, but none is even close to commercialization. But even with all those capacity advances li-ion batteries still have very low energy density. Pound for pound, gasoline stores 80 times more energy than li-ion batteries. That's why a Tesla battery pack weighs over 1,000 pounds, while 15 gallons of gasoline weighs less than 100. And those 15 gallons will take you further in most cars. Gasoline is an incredible fuel, and it won't be replaced as easily as many believe.

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    • F6Dave F6Dave on Dec 03, 2021

      @mcs I wouldn't call sodium-ion a major breakthrough. From what I've read their operating principle is nearly identical to Li-ion, while the lifespan is shorter (fewer charging cycles) and the energy density is lower. The main advantage is lower cost due to more readily sourced materials. The difference in energy density is significant, even with the thermal losses in ICE vehicles. Since an EV needs a 1,000 pound battery pack to go about as far as an ICE vehicle with 50 pounds of fuel, the EV must lug around a huge amount of dead weight. That takes a toll on tires and other components, as well as roads. Colin Chapman would be horrified by cars this heavy! But few people ask the most important question: where will we get enough electricity to charge hundreds of millions of new EVs? Our grid is already at the breaking point, with major blackouts tripling in frequency since 2015. With Americans driving 3.22 TRILLION MILES in just their personal vehicles last year, an EV transition will require a staggering amount of new generating capacity. Wind and solar won't provide the extra power. Despite hundreds of billions in subsidies those sources haven't even covered the increase in global energy demand. And growing opposition is making those massive structures more difficult to build. The best solution would be more nuclear, but the environmental movement has practically criminalized that industry. There are hopeful signs of growing support for nuclear, but that could take years to play out. So that leaves fossil fuels as the most likely source, which means we'll be burning more coal and a lot more natural gas. Coal usage is already booming in Europe as they're paying the price for some very foolish policies. It's very likely fossil fuels will continue to provide over 80% of the world's energy, just as they have for generations. And EVs will continue to be fueled primarily by coal and natural gas. But there's another possible solution: rationing of electricity. The UK will begin implementing this next May when new buildings (including residential) will be required to have EV charging ports that shut off for 9 hours every day. That's effectively rationing, because they don't have enough electricity. And all those German hotrod EVs can't go from zero to anything without a charge!

  • 285exp If the conversion to EVs was really so vital to solve an existential climate change crisis, it wouldn’t matter whether they were built by US union workers or where the batteries and battery materials came from.
  • El scotto Another EBPosky, "EVs are Stoopid, prove to me water freezes at 0 degrees Celsius" article.It was never explained if the rural schools own the buses or if the school bus routes are contracted out. If the bus routes are contracted out, will Carpenter or Bluebird offer an electric school bus? Flexmatt never stated the range of brand-unspecified school bus. Will the min-mart be open at the end of the 179-mile drive? No cell coverage? Why doesn't the bus driver have an emergency sat phone?Two more problems Mr. Musk could solve.
  • RICK Long time Cadillac admirer with 89 Fleetwood Brougham deElegance and 93 Brougham, always liked Eldorado until downsized after 76. Those were the days. Sad to see what now wears Cadillac name.
  • Carsofchaos Bike lanes are in use what maybe 10 to 12 hours a day? The other periods of the day they aren't in use whatsoever. A bike can carry one person and a vehicle can carry multiple people. It's very simple math to figure out that a bike lane in no way shape or form will handle more people than cars will.The bigger issue is double parked delivery vehicles. They are often double parked and taking up lanes because there are cars parked on the curb. You combine that with a bike lane and pedestrians Crossing wherever they feel like it and it's a recipe for disaster. I think if we could just go back to two lanes of traffic things would flow much better. I started coming to the city in 2003 before a lot of these bike lanes were implemented and the traffic is definitely much worse now than it was back then. Sadly at this point I don't really think there is a solution but I can guarantee that congestion pricing will not fix this problem.
  • Charles When I lived in Los Angeles I saw a 9-5 a few times and instanly admired the sweeping low slug aerodynamic jet tech influenced lines and all that beautiful glass. The car was very different from what I expected from a Saab even though the 900 Turbo was nice. A casual lady friend had a Saab Sonnet, never drove or rode in it but nonetheless chilled my enthusiasm and I eventually forgot about Saabs. In the following years I have had seven Mercedes's, three or four Jaguars even two Daimlers both the 250 V-8 and the massive and powerful Majestic Major. Daily drivers of a brand new 300ZX 2+2 and Lincolns, plus a few diesel trucks. Having moved to my big farm in central New York, trucks and SUV's are the standard, even though I have a Mercedes S500 in one of my barns. Due to circumstances with my Ford Explorer and needing a second driver I found the 2006 9-5 locally. Very little surface rust, none undercarriage, original owner, garage kept, wife driver and all the original literature and a ton of paid receipts and history. The car just turned 200,000 miles and I love it. Feels new like I'm back in my Nissan 300ZX with a lot more European class and ready power with the awesome turbo. So fun to drive, the smooth power and torque is incredible! Great price paid to justify going through the car and giving her everything she needs, i.e., new tires, battery, all shocks, struts, control arms, timing chain and rust removable to come, plus more. The problem now is I want to restore it and likely put it in my concrete barn and only drive in good weather. As to the writer, Alex Dykes, I take great exception calling the 9-5 Saab "ugly," finding myself looking back at her beauty and uniqueness. Moreover, I get new looks from others not quite recognizing, like the days out west with my more expensive European cars. There are Saabs eclipsing 300K rourinely and one at a million miles and I believe one car with 500K on the original engine. So clearly, this is a keeper, in love already with my SportCombi. I want to be in that elite club.