EV switch to hit auto suppliers hard, Stellantis CEO says

Stellantis CEO Carlos Tavares described the tough test awaiting auto suppliers while highlighting the rapidly increasing EV adoption rate. As western car makers drag themselves in the fray of the fierce battle to cut down costs in order to be competitive with their Chinese counterparts, Tavares was quite emphatic when he underlined the burden that had been shifted to suppliers under this new regime.

When turning to the essential question of affordability in the EV market, Tavares argued that production costs for EVs are significantly higher, reaching 40 to 50% on average, compared to petrol vehicles. This calls for a strict adherence to cost control measures in all aspects of operations; from supply chains and logistics all the way to transportation.

Tavares described a fundamental shift in the supplier base scenario and expected that a significant portion of sourcing will shift from developed Western countries. He described the trends in the EV industry that reveals that the field is gradually turning into a race to the bottom in terms of cost, while underlining the need for car manufacturers to cut costs.

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Despite the global imperative to address climate change, Tavares highlighted a critical factor hindering EV adoption: The third important factor is cost or affordability. He explained that consumers in the western countries are still unwilling to go for expensive EVs unless they are supported by policies. Tavares emphasised the implicit bargain consumers are making with their governments: stand with us in bringing EVs to the masses, and we shall do the same.

To address these challenges, Stellantis plans to keep adapting through multi-energy platforms that are versatile enough to support both battery electric and hybrid electric-petrol cars. Tavares approached this strategy as a wise way to approach unpredictability in the shifting automotive environment.

To confront affordability concerns more specifically, Stellantis is gradually gearing up to launch new entry-level products, such as a new Jeep model in the US market for under USD 25,000 or the Citroen e-C3 electric vehicle in Europe for around 20,000 euros. Further, with its partner Leapmotor, Stellantis plans to begin importing the T03 model from its Chinese JV for less than 20,000 euros in the European market.

On the specific issue of future M&A prospects, Tavares echoed Stellantis’ readiness to have a healthy balance of power. Similarly, Tavares said the company should prepare for new opportunities to come as opportunities are always available, but stressed on the importance of being ready to act on such opportunities when they are available.


(with inputs from Reuters)