Switching to EVs Adds 50% Extra Costs for Automakers: Stellantis CEO

4 years ago

Photo: Stellantis / Dodge

As automakers grapple with how to switch from gas vehicles to electric vehicles (EVs), some companies are pointing out some of the extra costs that will come with the shift.

Netherlands-based Stellantis CEO Carlos Tavares said that the costs of switching to EVs will mostly fall on automakers, and are apparently “beyond the limits” of what the auto industry can sustain, according to Automotive News.

The statements took place at the Reuters Next conference on Wednesday, in which Tavares emphasized that the costs of electrifying could threaten jobs and overall vehicle quality, while largely lodging these costs against automakers – not consumers.

Tavares said, “What has been decided is to impose on the automotive industry electrification that brings 50 percent additional costs against a conventional vehicle.” Tavares continued, “There is no way we can transfer 50 percent of additional costs to the final consumer because most parts of the middle class will not be able to pay.”

Stellantis said it is set to stream its operations and will deliver a $5.7 billion in cost reduction. The company has also fast-tracked its EV development, pledging $34 billion through 2025 to develop EV manufacturing infrastructure, from battery plants to investing in raw materials and technology.

Yesterday, Stellantis announced it had partnered with Daimler to invest in solid-state battery startup, Factorial.

Stellantis was formed earlier this year as part of a merger between Fiat Chrysler Automobiles and France’s PSA Group (Peugot S.A.). The joint brand consists of Abarth, Alfa Romeo, Chrysler, Citroën, Dodge, DS, Fiat, Fiat Professional, Jeep, Lancia, Maserati, Opel, Peugeot, Ram and Vauxhall, and Mopar auto parts.

In 2020, Fiat Chrysler spent $360 million euros on green credits for not meeting emissions standards, with the credits largely having been purchased from Tesla.

Earlier this year, fellow CEO Herbert Diess, the head of Volkswagen, warned employees about the potential to lose up to 30,000 jobs in a shift to EVs, though other executives and employees reported not knowing where the figure had come from, and were not able to validate the claim.

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