US presidential election to impact EV transition
Elections next year for president in the United States and parliament in Europe will have a big impact on the speed of the automotive industry’s electrification transition, according to Stellantis CEO Carlos Tavares.
But Tavares assured investors on Wednesday that Stellantis is prepared and that the company believes that the only real uncertainty involves how quickly the transition occurs.
“We are not assuming that the destination is going to change, we think electrification will go on,” Tavares said, appearing with Stellantis Chief Financial Officer Natalie Knight during a fireside chat at Goldman Sachs’ 15th annual Industrials and Autos Week in London.
However, the results of the elections, toward a faster ramp up if the winners are progressive, or a slower one if the winners are populist, will have a real effect on the industry, he said. It wasn’t mentioned, but it’s worth noting that former President Donald Trump, the Republican front-runner, was particularly critical of Joe Biden administration’s push on electric vehicles when he visited a nonunion auto supplier in Michigan during the UAW strike.
“What we believe is that the guys who are using what we would call, as a short cut, the legacy business to fund the future are going to be the guys who are going to be in the best position to accommodate to those different scenarios,” Tavares said, noting that the automaker, which owns the Jeep, Ram, Dodge, Chrysler and Fiat brands, is “doing very good money with the legacy business” and “already significant money with the EV business.”
Tavares said the automaker has prepared for the steep ramp-up in that transition, at least through 2027 or 2028, but that it knows that if the progressives win, then more investments will be needed after that. The industry, Tavares said, is in the midst of a Darwinian period, which implies, as the moderator noted, survival of the fittest and that some companies would not survive.
Tavares said the automaker is well-positioned currently, prepared for bumps in the transitional road as well, with a variety of vehicle types.
“We are in the black. Both in the U.S. and in Europe, our margins on electrified vehicles are in the black. That’s a good thing,” Tavares said. “We are closing the gap against (internal combustion engine vehicles) faster in Europe than in the U.S. because we started sooner, but we are achieving results.”
The automaker’s peers, he suggested, sometimes fall into different camps.
“You have two kinds of guys, you have the guys who cannot make EVs profitable, and you have the guys that broke down their company and they need to fund big investments on electrification. They just forgot that you need to fund the future with the existing profit and you need to accommodate the transition,” Tavares said. “You have to survive 10 years with good profitability and funding for your future. That’s what we’re trying to do.”
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