DETROIT — The chief operating officer in North America for the maker of Jeep SUVs and Ram trucks says the automaker's break-even point is below 30% of revenue in the region.
Stellantis NV CEO Carlos Tavares has emphasized the automaker's goal to keep its overall break-even point below 50% to make the transition to a sustainable tech mobility company and weather economic downturns as signs points to changing demand patterns for pricey pickups and other vehicles. From energy efficiencies to its supply chain costs and production quality, Stellantis has emphasized cost-cutting measures over years to get to that level, COO Mark Stewart said on Monday at the Automotive News Congress.
"We are in a very good position for recessionary time in terms of the ability to weather through that," Stewart said.
He emphasized that isn't through layoffs, though the company has offered a couple rounds of buyouts to white-collar employees and has made shift and job cuts at plants like in Belvidere, Illinois, because of the global microchip shortage. He pointed to the use of more efficient lighting in its facilities and a 5% gain in efficiency with more vehicles produced as examples of steps taken.
North America's break-even point "means we can weather some tough storms, that as a company, we could weather that many storms in the past, so I feel very good about our ability to get through this and our ability to really be able to convert," Stewart said. "The devils in the details, and we're in the details every day, making sure that it's affordable on the customer end and that it's going to be profitable for us."
Some moves, such as requiring North American suppliers to carry over any cost reductions to Stellantis, were unpopular with its vendors, resulting in a backlash and Stellantis retracting that decision. It's since brought in new purchasing leadership, and Stewart said he feels those relationships are moving in a better direction.
"This was one of the areas of the merger," Stewart said, referring to the 2021 marriage between Fiat Chrysler Automobiles NV and French automaker Groupe PSA to create Stellantis, "as things came together, and we were a little far too centralized and too remote operational with it.
"... We've spent a lot of time working to repair some relationships that were pretty tense. And in these times, things are going to be tense, but then it gets productive, working together, finding solutions so that we can all learn together. And this can't be a win or lose."
Stellantis plans to roll out 25 battery-electric models in North America by 2030 that Stewart has said could represent up to 53% of sales. He pointed to the EVs that Stellantis sells in Europe, saying they are profitable and North America is expected to follow. The goal is to grab greater market share and profitability than it has with its internal combustion engine vehicles.
Stellantis doesn't sell any EVs in North America yet, though the first ones, including the Ram ProMaster commercial van, are expected next year. It does have plug-in hybrid offerings, which Stewart said likely will continue based on the company's ability to comply with carbon emission and fuel economy regulations. The platforms for those hybrids are flexible to accommodate full EVs, too.