The CEO of Jeeps SUVs and Ram Pickup truck said Wednesday that automakers are in top high-speed modes in their shift toward electrification and regulators should focus their efforts on the energy industry and building charging infrastructure.
Stellantis NV CEO Carlos Tavares said accelerating electricity targets could lead to job losses. He said electric cars represented a 50% increase in cost that would outpace middle-class products or lead to a corporate restructuring that would bear those costs.
“My recommendation to those who make regulations and call on XYZ to care about the energy industry, now let the auto industry take care of its job, which is to provide clean, affordable and safe mobility for our customers,” Tavares said during an upcoming Reuters virtual conference.
To achieve this goal, Stellantis must digest 10% of productivity per year for the next five years in an industry that used to deliver 2% to 3% yield, he said. Stellantis has committed to investing approximately $35 billion (€30 billion) in electrification by 2025 out of a research and development budget and capital expenditure of approximately $80 billion (€70 billion).
“We will allocate 30 for electricity,” he said. “Can we do more if needed? Yes, of course we can. It’s a matter of setting different priorities for the things we are now planning to do.”
However, the auto industry has been hit by crisis after crisis, from the start of the COVID-19 pandemic last year to the global microchip shortage this year. Latest news about the new omicron virus variant and whether it will lead to more shutdowns.
“Over the past few years, we’ve learned how to deal with volatility,” Tavares said. “We know this is a very chaotic and very volatile world, and very unpredictable things are already happening, and what we’ve learned from this is that the most important thing for us is to keep the break-even point very low for our business model to make sure that we can accommodate those things that cannot. Predict and adapt to it.
Tavares’ comments come after Crosstown rivals General Motors and Ford Motor Co. signed a pledge earlier this month at the United Nations Climate Change Conference to end sales of cars equipped with internal combustion engines by 2040. Stellantis was not one of the signatories, but Tavares said The company will comply with government regulations and has accommodated the EU’s 2035 ban on ICE vehicles, although countries such as the UK have set the deadline sooner in 2030.
“Right now, what has been asked of the auto industry is to put the auto industry into not only the high-speed mode but perhaps the highest possible high-speed mode,” Tavares said. “If someone wanted to boost the speed even more, they could; it would just be counterproductive.”
He added that regulators should be aware of the implications of raising those schedules for jobs and transportation access: “If not, the people pushing the boundaries, they will be morally responsible for the problems that may emerge later.”
What distinguishes Stellantis, Tavares said, is that it has committed at least $5.6 billion (€5 billion) in cost savings from the merger between Fiat Chrysler Automobiles NV and French rival Groupe PSA that created the transatlantic auto giant. The company may be on a faster pace to realize these cost savings than initially planned.
“Not all automakers will succeed,” Tavares said of the transition to electric vehicles. “There are going to be some people who will struggle, but I consider our company at Stellantis with 5 billion synergies, we have a better starting position than most of our competitors.”