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EV cost burden pushing automakers to their limits, says Stellantis' CEO Tavares

DETROIT — Stellantis CEO Carlos Tavares said external pressure on automakers to quickly shift to electric vehicles potentially threatens jobs and vehicle quality as producers struggle with EVs' higher costs. Governments and investors want car manufacturers to speed up the transition to electric vehicles, 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% additional costs against a conventional vehicle," he said. "There is no way we can transfer 50% of additional costs to the final consumer because most parts of the middle class will not be able to pay." 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% productivity a year ... in an industry which is used to delivering 2 to 3% 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." Electric vehicle 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 both establishment automakers such as GM, Ford, VW and Hyundai, as well as start-ups such as Tesla and Rivian. The latter electric vehicle 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 highly profitable Jeep and Ram brands. 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.

Stellantis previews 4 electric platforms: Here's how they'll be used

Stellantis EV Day is hitting hard and fast this morning, with big news coming from Dodge and Ram and Jeep and the rest. But to support those brand transformations, a core initiative within Stellantis will help it become a leader in electrification. To do that, the group is developing platforms and technologies with cross-shared components and systems. This starts with four flexible BEV platforms: STLA Small, STLA Medium, STLA Large and STLA Frame. As for targeted numbers, they’re lofty: By 2024, Stellantis aims for over 500 miles of range, 0-62 mph in 2 seconds and charging 200 miles of range in 10 minutes. The four platforms will offer battery capacities from 37 kWh to more than 200 kWh. More specifically, STLA Small will offer 37-82 kWh and up to 300 miles of range. STLA Medium will have 87-104 kWh and up to 440 miles. STLA Large will provide 101-118 kWh and up to 500 miles of range. The truck-focused STLA Frame will provide 159-200+ kWh and up to 500 miles of range (and will support an electric Ram 1500 pickup). Chrysler EV Front 34 View 8 Photos Stellantis has big plans for the STLA Large platform, and is currently developing eight vehicles for it in the next three to five years. Examples of possible vehicles shown include a midsize Ram truck and a Jeep off-roader that could fight against the likes of the Toyota 4Runner. Stellantis design boss Ralph Gilles could be seen in a presentation looking over a Chrysler electric crossover based on this platform. We also saw a Wagoneer badge teased momentarily. There was a rendered silhouette of a crossover that looked like it could compete with the Ford Mustang Mach-E. Gilles said the platform would allow Stellantis to “create a long-range luxury sedan, an all-conquering muscle car, a heart-of-the-market DUV, a heart-of-the-market SUV, a very capable Jeep off-roading white-space opportunity vehicle as well as a new mid-sized truck.” See for yourself in this video starting at the 90-minute mark. As for powertrains, Stellantis is developing three electric drive modules with a shared, scalable inverter, and other common components, as well as in-house software to control them. Those drive units will offer from 70 to 330 kW (94-402 horsepower). More specifically, one EDM will provide 70 kW, a second will provide 125-180 kW, while the most potent can produce 150-330 kW.

FCA and Peugeot reportedly agree on merger

Citing a Wall Street Journal report, the Detroit Free Press says "Fiat Chrysler and PSA Groupe have agreed to merge." The Journal reported on talks between the two car companies only yesterday. It's said that Peugeot's board met yesterday to approve the deal, FCA's board met today, and an announcement could come as soon as tomorrow, Thursday. Both automakers have released statements, but neither company has released any information beyond admitting to ongoing talks. If the merger happens, the combined entity would become the world's fourth-largest carmaker with a $50 billion valuation, slotting in behind Toyota, the Volkswagen Group, and the Renault Nissan Mitsubishi alliance. Among the merger options possible, "an all-stock merger of equals" is the one analysts and Moody's seem to give the best grade. The reported merger would come about four months after FCA walked away from merger talks with Renault. FCA said the French government scuppered those talks over the role of Nissan in a reformed entity, but there were also brewing issues with French unions, and ongoing turmoil among Renault and Nissan leadership thanks to continuing fallout from ex-CEO Carlos Ghosn's arrest last year. FCA makes most of its revenue in the U.S. and rules Italy, while Peugeot is the second-best-selling automaker in Europe with its own brand in France and Opel in Germany. The two companies already have a partnership in Europe making vans, one that FCA CEO Mike Manley has spoken highly of. Among the list of obvious benefits in a potential merger, FCA would get access to Peugeot's small, modern platforms, $10.2 billion in cash, and electrified and hybrid architecture developments, the latter especially important to FCA as those are fields where it lags. Peugeot would get much easier access to the U.S. market, and the money-printing brands Jeep and Ram. A merged carmaker would have combined sales of nearly 9 million a year, based on 2018 results. By comparison, both Volkswagen and Toyota sell over 10 million cars a year, while the Renault-Nissan-Mitsubishi alliance almost 11 million. Peugeot CEO Carlos Tavares has proved he knows how to do turnarounds and mergers. After leaving a position as Carlos Ghosn's right-hand man in 2012, Tavares took over Peugeot in 2014, navigated a bailout from the French government and China's Dongfeng Motors in 2015, and turned PSA into a regional powerhouse.