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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.

Chrysler reports $464M net income for Q3

Chrysler has just announced earnings of $464 million in net income for this third quarter, a 22-percent year-over-year increase. Net income for the first three quarters of 2013 is at $1.1 billion. Net revenue climbed significantly as well, to $17.6 billion, a 13.5-percent increase on Q3 of 2012.
Those increases were thanks in no small part to an eight-percent rise in sales from the same period last year, with 603,000 vehicles sold worldwide. "Chrysler Group's ninth consecutive quarter of positive net income highlights our commitment to producing award-winning vehicles for consumers, such as the Jeep Grand Cherokee and the Ram 1500," said Sergio Marchionne, Chairman and CEO of Chrysler Group.
Despite the increased sales, Chrysler's US market share dropped slightly, from 11.3 percent in Q3 2012 to 11.2. Canadian market share remained level at 14.3 percent. Have a look below for the entire press release from Chrysler.

Peugeot's American future looks dead, but Stellantis intends to keep all brands alive

The years-old promise of a Peugeot return in the U.S. is looking bleaker by the second. Peugeot said the French brand would come back to sell cars in the U.S. five years ago, but now that FCA and PSA have transitioned to one Stellantis, that promise is looking a lot shakier. This news comes via a report from Car and Driver. When queried about Peugeot, Carlos Tavares, Stellantic CEO, offered this in response: “For the time being, I don't think that is part of the things that we want to prioritize for the next time window," Tavares said. "I think it's better that we funnel the talent, the capital, and the engineering capability of our Stellantis company to the existing brands to improve what needs to be improved and to accelerate where we need to accelerate, because we already have a very strong presence in this market." Tavares hasnÂ’t ruled it out entirely, but any kind of a Peugeot American renaissance is being pushed onto the backburner.  In good news for American brands, though, Tavares expressed great interest in keeping them all. Chrysler was the most worrisome of the bunch, as it only sells the aging 300 sedan and Pacifica minivan variants. Nevertheless, Tavares sees Chrysler as one of the “three historical pillars of Stellantis” and is eager “to give this brand a future.” Specifically, Tavares sees a high-tech future for the once-great American car company. Motor Trend reported on what Tavares spoke about in a call with the media. "It needs to rebound,” Tavares said. “We could think about what could be the next technologies in the automotive industry.” The obvious hint here is electrification and greater autonomy. Chrysler could theoretically become StellantisÂ’ electric showcase brand. ItÂ’s partway there with the Pacifica Hybrid PHEV minivan, but thereÂ’s still a long way to go for it to become the conglomerate's tech pillar. And then thereÂ’s Dodge and its powerful but emissions-heavy lineup. "We have the technology to deliver the torque, dynamics, and acceleration feeling, while also dramatically reducing the emissions," Tavares said. The Hellcat canÂ’t have a window-shattering 6.2-liter supercharged V8 forever, but it looks like Stellantis is at least committed to keeping the performance of DodgeÂ’s current lineup. Related video: