Stellantis CEO: 'No discussions on consolidation,' despite Chinese competition

Breana Noble, The Detroit News on

Published in Business News

Stellantis NV CEO Carlos Tavares on Tuesday said there could be only five major global automakers left standing following the electrification transition — with Stellantis among them — though the company isn't pursuing new significant collaborations or mergers at this point.

"We're not," Tavares said during a roundtable with reporters in New York about having such discussions amid pressure to tie-up with competitors in the face of Chinese competition in Europe. "Right now, we are just focused on execution. We have enough on our plate. There are no discussions on consolidation right now. ... I want to cut all speculation on that stuff."

Chinese automakers are making inroads in the European automotive market with low-cost electric vehicles and have eyes on the U.S. market, too. Mergers and acquisitions as well as collaboration with other companies are ways in which automakers could seek to increase volumes and reduce the burden of capital and research and development spending in an effort toward producing more affordable battery-electric vehicles with similar profits as their internal combustion engine counterparts.

"The Chinese are the major threat right now," Tavares said. "Those are the only guys that can sell BEVs at the price of ICEs, given the 30% cost-competitive edge expertise that they have."

The U.S. has tariffs on imported Chinese-made automobiles. But with reports that Chinese EV producer BYD Auto Co. Ltd. is looking to open a plant in Mexico, such a strategy could take advantage of the U.S.-Mexico-Canada trade agreement to avoid those duties.

Tavares says he's not asking for additional protection from the potential of Chinese vehicles imported from Mexico. Stellantis still would have to compete with the Chinese in other markets around the world.

"My only option is to go head-on and that's what we are doing," he said, pointing to the Citroën ë-C3, a small hatchback produced in Slovakia for Europe from one of Stellantis' French brands. The model starts at about $21,600 (19,990 euro).

Stellantis will seek to achieve a $25,000 vehicle in the U.S. market, though Tavares didn't provide a timeline for that. It's been made more challenging because Americans prefer larger vehicles that would require a larger battery pack, the most expensive part of an EV, for desirable ranges. He said there will have to be changes in supply chains, including using more suppliers in low-cost countries. The United States isn't a low-cost country.


"China is not the best sourcing place in the world for parts," he said. "China is challenged by India, challenged by Morocco, eventually by Turkey. Mexico is not far away."

Stellantis itself is a result of the merger between French automaker Groupe PSA and Fiat Chrysler Automobiles NV in 2021. Within three years, that has resulted in more than 8 billion euro ($8.7 billion) in cost savings, outpacing projections, Tavares said.

Stellantis also since has announced a number of acquisitions and investments to access technologies and position itself better in the market, including a 20% investment last year in Chinese EV startup Zhejiang Leapmotor Technology Co. Ltd. that also resulted in a joint venture to distribute Leapmotor EVs beyond China.

"In this approach, we don't have to be defensive of the Chinese offensive," Tavares said. "We can be offensive ourselves, because if we say that Leapmotors is the 15th brand of Stellantis, then if we are consolidating the exports of Leapmotors outside of China, then it is to our benefit."

Meanwhile, in the face of tariffs on China-produced vehicles, the joint venture also can take advantage of Stellantis' manufacturing footprint to produce Leapmotor vehicles outside China, as well. Tavares declined to confirm reports that the automaker plans to launch production in Italy, but said any of its manufacturing facilities that are competitive on cost and quality could have the opportunity to produce Leapmotor vehicles.

"You are bringing a much more cost-competitive BEV to the middle classes," Tavares said, "and you can have the possibility, using the manufacturing footprint of Stellantis, to go around those customs duties and to do a good job for the consumer, while being in control of the financials of those exports."

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