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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.

Ford extends shutdown, Stellantis confirms layoffs due to chip shortage

Ford and Stellantis this week announced new production cuts due to the global semiconductor shortage, with popular models including the Ford F-150 and Jeep Grand Cherokee facing cuts. Stellantis plans to temporarily lay off workers at one facility as production is curtailed.  According to Automotive News, Ford is extending shutdowns at some of its North American facilities into May. The Blue Oval has been forced to reduce or idle production of both its redesigned F-150 pickup and the popular Explorer due to the chip shortage. The Mustang, Transit, Edge, Lincoln Nautilus and Aviator will also continue to be affected. Stellantis is planning to temporarily lay off workers at a Jeep plant in Detroit during April and May due to a shortage of semiconductor chips. The company will cut two work crews at its Jefferson North plant in Detroit for three weeks starting April 26, then call them back and lay off a third crew from May 17 through the week of May 31, according to a schedule obtained by Bloomberg News. The plant on Detroit’s east side normally operates two shifts with three work crews six days a week to keep it running 20 hours a day. “Stellantis continues to work closely with our suppliers to mitigate the manufacturing impacts caused by the various supply chain issues facing our industry,” company spokeswoman Jodi Tinson said in a statement. “Due to the unprecedented global microchip shortage, Jefferson North will adjust its production schedule through the end of May.” Jefferson North employs about 4,800 hourly workers and makes the Jeep Grand Cherokee, the top-selling Jeep model last year, and the Dodge Durango SUV. A redesigned version of the Grand Cherokee is scheduled to start production in August, according to researcher AutoForecast Solutions. This article contains reporting from Bloomberg. Plants/Manufacturing Ford Jeep Lincoln Technology chip shortage

2014 Jeep Cherokee will keep Liberty designation in China... sort of

Chinese buyers will get their first live look at the 2014 Jeep Cherokee during the Shanghai Motor Show, but CarNewsChina is reporting that it will go by a different name - Ziyou Guan, which translates to "Liberty Light." The article states that our Jeep Liberty was never sold in China, but the iconic XJ Cherokee was sold and produced there as the Qinuoji (a phonetic translation of Cherokee).
The new Jeep Liberty Light will be built alongside the Fiat Viaggio (China's Fiat-badged version of the Dodge Dart) at the Guangzhou-Fiat plant, and the two models will share the same powertrains: a 1.4-liter turbocharged four-cylinder base engine paired to a five-speed manual or a dual-clutch transmission and a 2.4-liter four-cylinder (the base engine for the US-spec 2014 Cherokee) as an optional engine. It doesn't sound like the 3.6-liter Pentastar V6 will be offered in China.
We'll be on hand when the new Jeep debuts in Shanghai, so stay tuned to Autoblog this Friday night and Saturday for our live coverage of the show.