European automaker Stellantis (formerly Fiat Chrysler Automobiles) saw the writing on the wall.
The automaker, which includes brands like Jeep, Dodge, Peugeot, Fiat and Alfa Romeo, lagged behind rivals like GM (GM), Ford (F) and Volkswagen (VWAGY) when it came to announcing big transformation plans. electric vehicles, Rieger in the automotive world.
Stellaantis (STLA) decided it was time to catch up, and as such, the company unveiled its “Dare Forward 2030” plan at Strategy Day earlier this week. Among other things, the company wants to achieve by 2030:
Global sales of BEVs (battery electric vehicles) are five million units, accounting for 100% of BEV passenger car sales in Europe and 50% of US passenger cars and light trucks.
Introduce 75 electric vehicles, “including Jeep’s first all-electric SUV to launch in early 2023, followed by the Ram ProMaster BEV in late 2023 and the Ram 1500 BEV pickup in 2024.”
Double global net revenue to 300 billion euros
Cut carbon emissions by 50% (and go carbon neutral by 2038)
These targets are largely in line with what other global automaker competitors are planning. At Electric Vehicle Bottom in July 2021, the company announced that it would spend $35.5 billion or €30 billion by the end of 2025 to expand its electric vehicle offerings. Stellantis has not announced any additional funding to complete its Dare Forward 2030 initiative.
But with competitors like Ford aggressively shifting their business model this week, decoupling their ICE (internal combustion engine) business from their hit EV business (and boosting EV spending to an astounding $50 billion from $30 billion until 2026), the question remains whether Stellantis is doing business. enough to be competitive in the electric vehicle market.
Yahoo Finance had the opportunity to speak with Stellantis CEO Carlos Tavares in a private meeting this week.
Carlos Tavares Chairman of the Board of the PSA Group and CEO of Stellantis Carlos Tavares answers questions from reporters after a private visit to the plant of the Dutch multinational automotive company Stellantis, part of the PSA Group, in Duvrin, July 2, 2021. (Photo by DENIS CHARLET/AFP) (Photo by DENIS CHARLET/AFP via Getty Images)
Two main pillars
While many manufacturers are doing their best to transform electric vehicles, Tavares says the key to change are the “two main pillars” of electrification and software, which are very new for older automakers, but areas in which they must invest in order to compete.
The story goes on
Tavares, however, is a realist and doesn’t discount the value of the legacy ICE (internal combustion engine) business.
“It is absolutely true that we finance investments in electrification with funds coming from [ICE business], Tavares says. – That’s absolutely true. That’s exactly what we want, which is why we can offer $35 billion.”
Automakers need to be smart, Tavares said, because in order to bring about change, the industry must consider the costs of not only automakers, but also middle-class car buyers around the world. And that means replacing older, dirtier cars with newer ones that can still use gas engines but emit less than half the pollutants and cost a lot less than electric cars today.
Compromise in this regard is one of Tavares’ positions. Another position, where fossil fuels are completely banned, Tavares is not yet ready to accept.
“Dogmatism has taken the lead instead of thinking and looking at what is best for society,” says Tavares. “The number of electric cars that you can sell is largely determined by the household income of people who can pay a higher price for electric cars… The problem of global warming is limited to per capita household income, which then if you don’t complement this strategy with a strategy where you remove clunkers off the road and replace them with modern cars, even if they are less electrified, but keep them affordable, then you are missing something.”
Ford’s big gambit was ‘very well played’
As for Ford and CEO Jim Farley’s huge gambit to split the business into two divisions – electric vehicles and everything else, like the internal combustion engine business – Tavares did not hide his cynicism, considering this a step that was not solely related to the transformation of Ford.
“[Ford’s move] was very well received by the market. Very well, very well played. It was a good game,” he says. Tavares continues: “The automakers of the last century created wealth. And all of a sudden the fact that they’re legacy is a punishment for them because they have more movement restrictions than other guys, then it’s okay. We will stop thinking about it. And we’ll start moving. But then the society we work in has to accept the fact that when the auto industry starts up too fast, if there’s any collateral damage from lead, it’s because we need to move.”
Collateral damage is what happens to suppliers, dealer networks and even service providers who are not equipped or don’t know how to adapt to the future of electric vehicles. Tavares says governments and NGOs want automakers to go electrified immediately, but don’t want them to “make a mess” when the electric reality finally hits.
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and beyond Instagram.
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