EV switch to hit car suppliers hard, says Stellantis boss Tavares

The transition to electric vehicles (EVs) will impose a “significant burden” on car suppliers, Stellantis CEO Carlos Tavares said on Wednesday as Western carmakers race to cut costs and compete with Chinese peers.

Tavares said the challenge for carmakers is to sell EVs, whose production costs are 40% to 50% higher, at the same price as equivalent petrol models. This forces them to cut costs at every level of operations, including supply chains and logistics.

“You are going to see a huge shift of the supplier base. The sourcing will move from the Western world to the best cost countries,” he said during the Bernstein Strategic Decisions conference.

“The EV race has become a cost cutting race,” he added.

Tavares, the head of a company whose brands include Fiat and Peugeot, said the EV transition is being held back by affordability, with customers reluctant to buy expensive EVs unless supported by governments through incentives.

“The Western world consumer is telling the Western world government, 'OK, there is the global warming issue, fine, but if you don't help me, I will not help you',” he said.

Stellantis will continue to bet on multi-energy platforms — those created for EVs but that can also underpin hybrid electric-petrol vehicles — to retain flexibility in its ranges, he said.

“Today, multi-energy is good to face uncertainty.”

In an effort to make cars more affordable, the Franco-Italian group will soon launch a Jeep model in the US costing less than $25,000 (R466,930), after its €20,000 (R403,043) Citroën e-C3 EV in Europe.

Stellantis also has a joint venture with Leapmotor, which will allow it to sell the T03 model of its Chinese partner for less than €20,000 (R402,873) in Europe.

Asked about potential M&A deals, Tavares said his main goal is to keep Stellantis in strong business shape.

“If an opportunity comes, we will consider it, but we have to be fit at the moment where that opportunity is passing by.”