By Giulio Piovaccari

MILAN (Reuters) – If playing catch up with Tesla (NASDAQ:) is what everyone in the auto industry is about then Stellantis, the company formed from the merger of Fiat Chrysler and Peugeot (OTC:), has had a good start – its shares have far outpaced its U.S. rival in its inaugural year.

This is only the beginning.

Analysts want Stellantis to make progress in China’s business and Europe when its Chief Executive Carlos Tavares presents his business plan for March 1st.

Stellantis has a market value of just 6%, even though its shares have increased more than 60% from their initial debut Jan. 18, 2021. That is compared to a 27% gain by Tesla’s. Its market capitalization of 59 Billion Euros ($67B) was merely 6% lower than that of its U.S. competitor.

However, a strong start to the year bodes well. Jefferies analysts state that Tavares is visionary and ambitious with “sustained streams of strategic initiatives.”

After establishing the No. Tavares is the world’s No. 4 carmaker in terms of production. He has also mapped out an electrification strategy worth 30 billion euros and formed alliances to help accelerate software development and semiconductors.

He also drafted plans for five batteries plants, and made deals with unions in order to continue streamlining European operations. This has sidestepped potential labour disputes and increased the operating profit margin of around 10%.

Stellantis had a nearly unchanged workforce in 2017 at 300,000. This was despite Faurecia being a Peugeot-controlled parts manufacturer. It is this that keeps Tavares promise to not cut jobs or close down plants after the merger.

All of this while global automakers face a supply chain and semiconductor crisis that caused millions of lost vehicles last year. This is unlikely to improve.

Marco Santino of Oliver Wyman management consultants said that Tavares lived up to his reputation for being a pragmatic man, not taking a rigid approach to unions, and that the outline of his strategy was in place.

His path was already mapped, it just needs to be strengthened,” he stated. His business plan is not going to produce fireworks.

CHALLENGES

However, many believe more action is necessary.

For example, Jefferies analysts say that 14 Stellantis brands, including Jeep, Ram and Citroen as well Opel, Opel, and Maserati, walk “a fine balance between differentiation and internal competitiveness.”

Tesla leads the industry in transitioning to an electric- and software-driven future. This is at a moment when Tesla’s single brand and focused strategy are key.

Tavares said that all aspects of the group are under scrutiny, including brands. Analysts have even suggested they could be dropped to make it more cost-effective.

The 63-year-old said that she and her family love all of them, but they cannot be killed.

He said that “When you love them,” you will give them a chance. Each brand would have ten years to show its worth.

Long-term challenges for the group include reviving fortunes in China. China is the biggest market for automobiles, and Fiat Chrysler was the only owner. Peugeot-owner PSA held very little market shares.

Tavares stated that, “We are now negociating and changing very much at core,” without going into detail about his China plans.

Analysts at Jefferies suggested that the company may look to capitalize on its Maserati, Jeep, and Maserati brand strengths in China. The analysts suggested it might also look to China as an overseas base or expand its relationships with Foxconn.

Oliver Wyman’s Santino, Oliver Wyman said that Tavares is fortunate because he has the time. The moment’s focus for investors is Europe’s turnaround. He is making progress on this.

($1 = 0.8775 euros)