Joseph White

DETROIT, (Reuters) – Stellantis NV Chief Executive Carlos Tavares stated that external pressures on automakers to move to electric cars could threaten jobs and quality of vehicles as manufacturers struggle to handle the increased costs of making EVs.

Investors and governments want auto manufacturers to accelerate the transition to electric cars, however, the cost of doing so is “beyond what the industry can support,” Tavares stated in an interview Wednesday at the Reuters Next conference.

“What’s been agreed upon is to charge the automobile industry an additional 50% for electrification compared to conventional vehicles,” he stated.

We cannot transfer half the additional cost to consumers because the majority of the middle classes will not pay.

Tavares suggested that automakers might charge higher prices, sell fewer vehicles, or take lower profits. Both of these paths lead to cuts. Union leaders in Europe https://www.reuters.com/world/europe/transition-electric-cars-threatens-60000-jobs-italy-fim-cisl-union-2021-11-19 and North America https://www.reuters.com/business/autos-transportation/united-auto-workers-presses-gm-ford-unionizing-battery-plants-2021-04-28 have warned tens of thousands of jobs could be lost.

Tavares stated that automakers require time to test and ensure new technology works. It is counterproductive to try to accelerate this process. This will cause quality problems. He said that it will cause all kinds of problems.”

Tavares stated that Stellantis is working to prevent cuts by increasing productivity at a rate far greater than the industry average.

He stated that the industry is used to producing 2 to 3 percent productivity improvement over five years.

Tavares declared, “The future is going to tell us who will be able digest this, or who will fail,” “We’re pushing the industry to its limits.”

Analysts predict that electric vehicle prices will fall and that combustion and battery vehicles may reach parity in the second half.

Stellantis, like other carmakers who make profits on combustion engines, is being pressured by Tesla (NASDAQ) Inc and other electric vehicle startup such as Rivian.

In terms of employment and vehicle sales, the electric vehicle companies have a much smaller market share. However, investors gave Rivian and Tesla higher market values than either the Jeep SUV owner or the Ram pickup truck franchise.

This investor pressure is exacerbated by policies of government to reduce greenhouse gas emissions. California, the European Union and others have established goals for reducing sales of combustion engines by 2035. For all-electricity, the United Kingdom set 2030 as the date.

Tavares stated that governments need to shift their focus from climate policies towards cleaning up the energy sector, and building infrastructure for electric-vehicle charging.

Stellantis was created 2021 by the merger of French carmaker. Peugeot SA (PA:), and Fiat Chrysler NV an Italian-American automobilemaker, are on track for delivering 5 billion Euros in cost reductions through streamlining their operations, Tavares stated.

Stellantis is now moving at a faster pace thanks to Tavares who has committed 30 billion Euros through 2025 for the development of new electric vehicles, as well as building batteries plants, and in new technology.

Stellantis, along with German automaker BMW, announced Tuesday that it has invested in Solid-State Battery Startup Factorial. Daimler AG (DE:

Tavares stated that “we can invest more” and “go deeper in the value-chain.” “There might be additional (investments), in the near future.”

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