Tavares says EV 'sweet spot' is $25K, criticizes labor strikes as 'destructive'

Stellantis CEO Carlos Tavares, who has warned that the middle class will be priced out of the electric vehicle market if automakers can't absorb the additional production costs they require, said Wednesday that the sweet spot for affordable EVs is "around $25,000."

Tavares said reaching this price point will be essential to safeguarding the company's U.S. manufacturing footprint. He said building affordable EVs that are profitable is the "real thing we should be discussing" with the UAW during negotiations this year.

"If we want to protect the jobs in the U.S. and the manufacturing footprint in the U.S., we need to find the conditions to make a $25,000 BEV in the U.S. that we can sell at significant volumes with reasonable margins for that proposal to the market to be sustainable," Tavares told reporters. "That means a certain number of conditions. And that's the kind of things that we should be discussing with our union is how do we build that?"

Tavares said the overall volume that Stellantis could build in the U.S. "is dependent on our ability to reach that kind of business proposal, which is a $25,000 affordable BEV at a profit, which, of course, relies on the total production costs that we can achieve in the U.S. with our suppliers and within our own plants."

Tavares also discussed the potential for a UAW strike and Jeep's lagging sales. He said he understands strikes are a tool unions can use to flex their muscle but believes they hurt everyone.

Stellantis, Tavares said, doesn't plan for strikes but knows they are a risk during negotiations.

He said Stellantis has had few strikes among its global work force since being created in 2021, demonstrating that "we are a company that knows how to support a productive dialogue with our partners."

Tavares said it isn't in the company's DNA to plan for strikes.

Strikes are "destructive for everybody, so it's not a value-creation process," Tavares said. "It's just a way to put more muscle in a negotiation.

"What we would go for is constructive dialogue, open-minded dialogue, recognition that the world is changing, recognition that we need to fix short and midterm issues and from there, I think there is enough imagination around the table to find solutions, and certainly destroying value is not going to make the life of our people better, and we want to protect the life of our employees. That's our mindset."

When asked about Jeep's challenges, Tavares admitted that Stellantis needs to do a better job with its top-selling brand.

Jeep's U.S. sales fell 12 percent in 2022 and decreased 12 percent in the first half of 2023. The Grand Cherokee, Jeep's best-selling model, had a 7 percent sales decline through June, and Wrangler sales dropped 15 percent during that span.

Tavares blamed "suboptimal marketing tactics [and] not having always the right trims in the backyards of our dealers. When you look at it operationally, there are many things we can do better, and that is part of the menu that we are going to execute to bring back the share of Jeep."

Tavares is excited about the upcoming EVs joining Jeep's lineup in 2024, the Wrangler-inspired Recon and the sleek Wagoneer S, that he said will help with gaining market share and building profitability.

Tavares said the brand has seen success with electrification amid the sales slump. The Wrangler 4xe is the top-selling plug-in hybrid in the U.S. and the Grand Cherokee is No. 2.

Stellantis said total PHEV sales in North America after six months more than doubled to 66,000 vehicles.

"We do not accept the fact that we lost share," Tavares said. "We think we can do and should do a better job, and what is making us confident is that we have seen what we did not do right the first time. That is helpful when you know what you can do better. It is clearly identified. It is not rocket science. We just have to do it properly, and we have a product pipeline, which is absolutely outstanding."