Stellantis' Multi-Energy Strategy in Tough Year Ahead

Stellantis CEO Carlos Tavares warns there are tough “headwinds” ahead for the company while stressing its strengths in a multi-energy powertrain strategy.

Last year the company faced high raw material costs and elevated pay settlements with unions in North America, while increased price cutting by Chinese automakers makes the car market ever more competitive, he says.

Addressing the company’s annual general meeting, Tavares says: “We see that the market is being more and more competitive in terms of pricing. We cannot ignore that.” Part of the plan to improve competitiveness is its investment into Chinese battery-electric vehicle company Leapmotor that saw Stellantis invest €1.3 billion ($1.4 billion) into the company to forge a global partnership last October.

Tavares adds: “We are at the point of inking the deal with Leapmotor where we can use this Chinese brand to make money and to take our fair share in the worldwide markets. By the end of this year, we will be shipping the first cars out of the joint venture that is going to take care of the exports from China to the rest of the world.”

Among the challenges still to face in 2024, Tavares notes the increasing numbers of BEVs being sold gives the company an issue over profitability compared to internal-combustion-engine products. He explains: “On the headwinds, we continue to see an increase on the EV sales mix and we know the profit margins of electric cars are not as good as pure ICE, so we have to work on normalizing the margins of electrified vehicles to be immune to the increased sales mix. We see the market is becoming more competitive in terms of pricing and we cannot ignore that. There is also inflation on the labor costs and that is one of the topics where we need to take care.”

Nonetheless, Tavares sees the coming year as an exciting one for the company’s latest planned product launches. He says: “However, 2024 will be a fantastic year for product. We love cars and some of the product highlights are the Peugeot E-3008 with a brand new Stellantis platform which will be one of the pillars of the company.”

He gives particular attention to the upcoming Ram 1500 REV powertrain for the U.S. market boasting a range extender to offset issues for certain consumers. Tavares says: “This vehicle can accommodate the expectations of customers of the coastal areas as much as the expectations from those living in the deep countryside.”

He points to the criticism that Stellantis drew when it announced a range of new platforms that could accommodate a multi-energy powertrain, such as the company’s latest STLA Medium that can be applied to a BEV, gas hybrid or plug-in hybrid. In apparent reference to a perceived slowdown in BEV sales in some markets, he says: “It appears today with the sales we see that it was the right strategy to protect the multi-energy platforms to accommodate the variations of the markets and be flexible.”

The STLA Large, claiming a 500-mile (803-km) range as a BEV, will be launched in the U.S. this year on the Dodge Charger BEV, the Dodge Challenger and the Jeep Wagoneer S.