“Electrical technology is not complete”

In an interview with Le Figaro, Carlos Tavares, CEO of Stellantis — a consortium of auto giants including Peugeot, Citroën, Jeep, Fiat and Opel — described the industry’s transition to electric as “brutal”. He evokes electrification as a monumental challenge not only technological but also organizational, in a context of heightened competition with Chinese manufacturers. Skeptical about the relocation of production to France, the effectiveness of subsidies and the group’s state of readiness for electrification, Tavares calls for a global approach to tackle these challenges.

Carlos Tavares, CEO of Stellantis, a group which brings together big names in the automobile industry such as Peugeot, Citroën, Jeep, Fiat and Opel, did not go to any lengths during his interview with Le Figaro. The businessman spoke with unusual frankness, not hesitating to describe as “brutal” the shift towards electric that the automotive industry is forced to take.

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Brutality is the right word to describe the amplitude of the change that is imposed on us in a very limited space-time. The industry must move from a technology that has been optimized, honed, for more than a century to a technology that is still in its infancy.

According to Carlos Tavares, this “brutal” transition is all the more difficult as it takes place in a context of increased competition, especially from Chinese manufacturers. Indeed, these are already a step ahead of their Western counterparts in terms of electrical technology and more competitive cost structures.

The technology is not complete. Nothing is optimized. This is the reality in the face of which we must be lucid. (…) the Chinese manufacturers have taken the lead and we must be ready to fight against them.

But beyond this brutal technological transition, it is the magnitude of the organizational challenge that is underlined by the leader of Stellantis. Comparing electrification to a pole vault for seasoned basketball players, he underlines the necessary upheaval of industrial organizations and infrastructures to make this transition a success.

Carlos Tavares is resolutely lucid and advocates a global rather than protectionist approach

Faced with Chinese competition, Carlos Tavares is resolutely lucid and advocates a global approach rather than protectionist. For him, Stellantis, as an international company, has to face its competitors all over the world, including in Europe. European protectionism, he says, could further hamper the group’s business in foreign markets.

Although Stellantis has already introduced a dozen electric vehicles, Carlos Tavares believes that the group is not yet fully ready for electrification. He also points out that subsidies are not the magic bullet to save the automotive sector from this delicate transition. For him, success will depend on the selling price and the ability to compete with low cost cost structures, without necessarily resorting to production in China.

At the same time, Carlos Tavares is not convinced by the idea of ​​relocating production to France. This is particularly the case for models like the 208 electric, the best-selling electric car in France in 2022. According to him, such a relocation would force the group to increase its costs, which would be contrary to the objective of competitiveness. It calls for strategic thinking to bridge the gap between production costs in Europe and China, and to leverage the strengths of European countries.

It is on the selling price that the success of this transition will be made. However, relocation increases costs. So that takes us away from the objective. (…) An investment subsidy cannot offset a difference in variable costs over the life cycle of a model. Let’s be wise, this is probably not the best use of taxpayers’ money.

Faced with Chinese competition, he is considering two solutions: “ The first is to fight with the same weapons as our competitors; in short, to take advantage of low cost cost structures. The second is to produce cars in our countries with high added value and greater technological content. “.

One of Carlos Tavares’ concerns is the potential modification of the ecological bonus in France. At present, the ecological bonus is a financial aid granted by the French State to encourage the purchase of clean vehicles, in particular electric ones. Tavares believes that this system, although created with good intentions, indirectly favors Chinese manufacturers due to their lower production costs. The CEO of Stellantis therefore hopes for a revision of this aid, as Emmanuel Macron wishes, so as to promote more balanced competition between European and Chinese manufacturers. He nevertheless advocates the integration of European countries in the calculation, and not only those which produce in France.

Carlos Tavares is aware of the challenges posed by the transition to electric vehicles and the massive influx of Chinese manufacturers. His lucidity is refreshing, but the question arises: is it enough to meet the challenges ahead?

The Stellantis Group is not standing idly by in the face of these challenges

However, the Stellantis group is not standing idly by in the face of these challenges. Indeed, several of its brands are making great strides towards the electric transition. Jeep, for example, recently released its first all-electric vehicle, illustrating the shift towards electrification even from manufacturers traditionally focused on gas-powered off-road vehicles.

In addition, Fiat, another emblematic brand of the Stellantis group, has announced the launch of the Fiat 600e, a small fully electric SUV. This launch represents a significant step forward for Fiat in its transition to a more environmentally friendly model range.

Peugeot, meanwhile, is also making notable progress in the area of ​​electric vehicles. The brand is indeed testing the remodeled version of its 2008 electric.

Among Stellantis’ initiatives to expand its electric vehicle offering, Citroën, one of its flagship brands, has announced its future electric Citroën ë-C3. This model, which will be produced in Slovakia and offered at a price of less than 25,000 euros, embodies Stellantis’ desire to offer affordable electric vehicles.