Fully 100% of the vehicles sold by Stellantis in Europe will be entirely battery-powered by 2030, with BEVs making up 50% of sales in the U.S., CEO Carlos Tavares said during a 2-hour briefing on the carmaker’s business strategy.
The transition will accelerate rapidly during the next several years, with brands ranging from Jeep to Maserati adding new all-electric models. By 2026, Stellantis will introduce no new models in Europe using internal combustion engines, the executive noted.
Tavares emphasized the transition will be challenging, however. And it will require a level of shared sacrifice, with dealers and suppliers helping cover the higher cost of building battery-electric vehicles. Government incentives also will be essential for the near future, the CEO emphasized, though he said he expects that “there will be a progressive decrease” in that support over time.
All 14 brands plug in
There are significant differences in the way each of the automaker’s 14 brands has approached electrification until now — in large part reflecting the very different policies of Fiat Chrysler Automobiles and the PSA Group, the two companies that merged to form Stellantis last year.
Former PSA marques like Peugeot and Citroen already offer a number of BEVs, as well as hybrids. With the exception of an all-electric Fiat 500 model, the old FCA brands were far slower to embrace electrification in any form and so far only offer a handful of hybrids and plug-in hybrids.
That’s about to change, however. Jeep is not only expanding its line-up of PHEVs but will launch its first fully electric model “during the first half of next year,” said Tavares, adding, “It is the first of our comprehensive full-electric Jeep line-up that will cover every SUV segment by 2025.”
Ram recently announced it will launch an all-electric version of its 1500-series pickup in 2024. And Tavares confirmed that the Ram BEV line-up will steadily expand throughout the decade. Chrysler will introduce a production version of the all-electric Airflow concept in 2024 and go 100% BEV by 2028. And the shift will touch the rest of the Stellantis family by mid-decade.
The transition will require a massive shift in the Stellantis manufacturing footprint, along with a transition in product development.
The company will start building its own batteries and Tavares on Tuesday announced plans to put in place capacity for 400 gigawatt-hours of lithium-ion cells. That’s about 140 GWh more than he previously had indicated, reflecting the higher BEV targets the new “Dare Forward 2030” strategic plan envisions. While Tavares wouldn’t say how many “gigafactories” that will require — Stellantis has five planned — but it could mean as many as a more, based on the size of the battery plants rivals like General Motors, Ford, Mercedes-Benz and Tesla are setting up.
By 2025, Stellantis has committed 20 billion euros, or more than $22 billion at current exchange rates, to fund its electrification program.
While the automaker eventually expects BEVs will help it yield double-digit profit margins, it will be difficult to recover its investment in the near-term. If anything, like its competitors, Stellantis will face a challenge simply breaking even on the technology. Industry analysts estimate the typical BEV costs about $4,000 more than a comparable gas-powered model to produce. Passing that on to consumers would be difficult at a time when the price of the typical new vehicle has already reached record levels.
“I need to make EVs affordable so our customers can be able to pay for them,” said Tavares.
Batteries make up the single biggest line item on the EV balance sheet. Stellantis hasn’t offered specific numbers, but General Motors said it cost $145 per kilowatt-hour for the batteries in the Chevrolet Bolt EV when it debuted in 2016. The Detroit automaker expects that to drop to $100 as it ramps up production of its new Ultium line of lithium-ion cells.
And during a Wolfe Research seminar last week, Venkat Srinivasan, director of the Argonne National Lab’s Center for Energy Storage Science, forecast the number could drop by 30% more by mid-decade — especially as new battery technologies come to market. For his part, Tavares confirmed that Stellantis hopes to commercial next-gen solid-state batteries, though he didn’t lay out a timetable.
While experts like Srinivasan believe BEVs will be cheaper to build than gas models by late in the decade, Tavares said his company will need assistance in the near to midterm.
“In this transformation of the industry, it’s not only about the OEMs,” the Stellantis CEO emphasized during an earnings call last week. “It’s also about the supplier base and, as you know, there is significant competition in the supplier base and that is going to be also a very nice Darwinian transition period for our suppliers as much as it is for the OEMs. It means that we are in the same boat, we are in the same transformation.”
Suppliers aren’t exactly pleased to hear they may face pressure to cut costs at a time when, many already are struggling financially due to production cuts caused by the global shortage of semiconductors.
“The majority of our folks feel that they don’t blindly take contracts that have this kind of language in it,” Jeanine Lassaline-Berglund, president of the Canadian Association of Moldmakers, told Automotive News.
Stellantis also plans to trim marketing and distribution costs, said Tavares, during the “Dare” strategy session. The automaker expects the number of vehicles it sells direct to customers will double every year through mid-decade, reaching a third of its total by 2030. And it already is working with European dealers to change the retail model. But the approach will change “depending on the region,” he cautioned. Stellantis will find it much more difficult to radically rethink its dealer strategy in the U.S. due to strict state franchise laws.
Government mandates, government incentives
With regulatory mandates driving the transition to battery power, Tavares said governments must also share some of the burden to make EVs more affordable.
“We need around five to six years … of some kind of support” from the governments where Stellantis plans to sell its BEVs. That’s on top of any money used to expand a charging network.
That can’t go on forever, said Tavares, acknowledging it would simply be too expensive for governments to prop up sales of electric vehicles indefinitely. “So, we consider that there is a transition period (during which) they will reduce progressively their support.”
Incentives vary widely by market. The U.S. Congress currently is sitting on a proposal to ramp up EV incentives from the current maximum of $7,500 to as much as $12,500. But that has stalled, along with the rest of President Joe Biden’s Build Back Better spending bill.
How much external help Stellantis actually will get is far from certain. But the automaker is clearly on a course to electrify its line-up, Tavares said. The challenge will be doing so while hitting the aggressive profit targets it has laid out for itself under the Dare Forward plan.