New Stellantis EV approach belies CEO's comments

Has Carlos Tavares really changed his tune on electric vehicles?

The Stellantis CEO has been critical of widespread electrification, calling it "a technology chosen by politicians, not by industry." But last week, Stellantis said it aims for all of its sales in Europe and half of its sales in the U.S. to be battery-electric vehicles by the end of the decade.

Tavares has made compelling arguments against speeding up EV production. Electric vehicles are 40 to 50 percent more expensive to build than those powered by internal combustion engines, he said, which is a sum Stellantis cannot fully absorb at competitive prices.

Alternatively, passing those costs on to customers will drive millions out of the new-vehicle market — and obviate thousands and thousands of manufacturing jobs.

Stellantis has tried to get ahead of higher EV costs by shifting much of the burden to its suppliers in an approach we criticized in this space last month.

But Tavares wasn't wrong when he said "the big gorilla in the room" was the cost of electrification: If it doesn't get tamed, the results could be gruesome.

Yet governments around the world are aiming to outlaw the use or sale of gasoline-burning vehicles on a timeline set without regard for industrial reality.

Lawmakers have set ambitious targets for electrification to combat climate change and reduce tailpipe emissions. Those are legitimate goals, and of course, the automotive industry will be part of the solution.

But if the breakeven price for an entry-level vehicle becomes $40,000, there are going to be millions of factory workers looking for new jobs.

Meanwhile, investors keep goading the movement along, as if every EV will command Tesla-like pricing and passion — and sky-high stock valuations. They push automakers to pledge billions of dollars to EVs and even spin off their EV businesses. Ford Motor Co. is now splitting its internal combustion and EV operations into distinct units to highlight shareholder value.

Tavares has molded a business plan that seems to reflect lawmakers' agendas and investors' hopes more than his own logical words.

As we've seen, plans can be adjusted with market realities. But at least for now, the Stellantis strategy is to become a big gorilla itself in the EV space.