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Stellantis CEO in Detroit: COVID-19 pandemic shows people want cars

Eric D. Lawrence, Detroit Free Press on

Published in Business News

For Carlos Tavares, the man who controls the fate of Jeep, Ram, Chrysler and Dodge, the pandemic, and what it has wrought, has been eye-opening.

Crises, which began with COVID-19 and spread into the semiconductor shortage that has tested the resilience of the supply chain, driven up vehicle prices and limited what vehicles are on dealer lots, have revealed something amazing yet simplistic, Tavares, who is CEO of Stellantis, told a group of journalists in Detroit on Tuesday.

"My order book is going through the roof. People want to buy cars. It's amazing. It's as if we have all discovered through the COVID crisis how important it is to protect our freedom of mobility. And therefore, what's the best way to protect my freedom of mobility is to have (a) car," Tavares said, during a roundtable at a former Dodge Viper plant now known as the Conner Center.

Describing that collective realization was a way for Tavares, who was in town to unveil the company's software strategy for the years to come, to highlight the challenges he sees the industry facing.

With pressure increasing from governments to end the sale of internal combustion engines, electric vehicles, which Tavares said the company is bullish on, are where the industry is headed. But battery electric vehicles cost 50% more to produce than cars with traditional engines, raising questions of affordability, he noted. If that's not managed correctly, the automotive industry won't just be transformed, it will be downsized because the middle class would be priced out.

"So the question is where do we want to go as a society in terms of protecting or even promoting freedom of mobility and that's a question which has to be addressed to the people we are supposed to vote for, right? We are just trying to keep our companies sustainable, competitive," Tavares said.

Part of that effort to be sustainable will involve generating more money through areas including software. On that front, the company revealed Tuesday its expectation that it will raise about $22.6 billion (20 billion euros) in revenues by 2030 by transforming how consumers interact with and experience their vehicles by offering "software-enabled products" and subscription services.

It's a push that's designed to generate not only more money from car buyers, but also one the automaker hopes will catch eyes on Wall Street.

 

"We are indeed transforming Stellantis into a mobility tech company," Tavares said during a presentation before his meeting with reporters that also highlighted autonomous vehicle development partnerships the company has with BMW and Waymo.

Investor interest is key for legacy automakers like Stellantis, which have market valuations a fraction of the size of electric vehicle companies like Tesla and even new entrant Rivian. At one point, Tavares appeared to address that disparity by asking whether markets had fully recognized the transformation of Stellantis, which plans $34 billion (30 billion euros) in electrification and software developments through 2025, and answering, "perhaps not."

There's a lot more "value creation" to be unleashed by Stellantis, he said, noting that the "message today is this company is on the move."

Stellantis, which formed earlier this year from the merger of Fiat Chrysler Automobiles and Peugeot maker PSA group, also announced a partnership with iPhone-maker Foxconn to design "a family of purpose-built semiconductors."

Tavares said in a news release that the chips would cover 80% of the company's semiconductor needs. Specifics on how the partnership would operate and how soon chips from the venture would be available were not released.

It's the second partnership with Foxconn. In May, the companies announced a joint venture to supply Stellantis vehicles with infotainment and connected vehicle features.

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