Does PSA want to become a bigger automaker or become a mobility provider?
A bigger carmaker would be very helpful because if you don't become larger to dilute your r&d costs, and have a volume-scale effect on the purchasing of components such as batteries, you could be in trouble. It's especially helpful with electrification because you will have leverage to buy kilowatt-hours at the most competitive price. Those two factors are real. That is where it helps. And specifically, for people working in regions where there are going to be significant breakthroughs on CO2 objectives, scale would be a real benefit.
PSA does not have a designated COO. How do you manage decision-making?
I am a strong believer in a matrix organization. At PSA we operate within three axes: the regions, the brands and the functions. Even within this three-dimensional operation, we have business units that go through and try to boost the system. For example, we could have the CEO of Peugeot reporting on volumes and profit, then the European head report on total profits, volumes, market share, quality and customer satisfaction for all brands in the region. On the functional side, we would look at whether we are ready to launch a new car, or are manufacturing costs being reduced. So we are constantly reviewing the business in three dimensions.
How is that beneficial?
It's very important to let the matrix breathe. People are human. They have different characters, and they express them in a personal way. If you "lock" the matrix, it will break, because you can't force people to all act in the same way. In the end, I don't care about the win for the brand, for the region or for the function. I want PSA to win as a whole.
You're a big believer in agility. When your company grows, how do you maintain its maneuverability?
Adding Opel/Vauxhall to Peugeot, Citroen and DS was a good learning experience. What I'm trying to do is find the spirit in what we want to achieve as an efficient team. People come to me with a paper with, say, 10 bullet points. I will listen to what they are, then say, "OK, what is the spirit of what we want to do?" If people understand that, then they won't ask you every day what they should or should not do. They don't have to ask me for validation. Therefore, you will have more time because people will have more autonomy. It is rewarding, and they can unleash their potential in a way that is much more fulfilling for them. And it gives me much more time.
So you are making fewer decisions now?
Certainly. But there are still topics where people don't feel comfortable enough to take a strong position, so they can use their monthly one-on-one, one-hour meetings with me to ask for guidance.
One area where both companies are weak is China. How would a merger with FCA help?
At least for PSA, I can recognize that we haven't achieved very much in China. But if we come together, it could give us a lever to get things done there. The fact that we would be together would, perhaps, open other doors, or different doors, than the ones we could open alone.
New European Union CO2 regulations will start to take effect Jan. 1, and fleet emissions will have to drop sharply — to 95 grams per kilometer. How will PSA flip that switch?
We have a very precise process. I can't say a lot about it because it's highly competitive, but it involves our production, our order book and making our dealers actors in what we are doing, not just followers. For us, it's an ethical matter [to meet CO2 targets], not just a financial matter. Our employees' children might ask them someday, "What did you do to fix the global warming issue?" So they want to say that despite working at a car company, they are contributing — and working really hard — to address global warming.
PSA has had some of the best operating margins in the auto industry, but there is a cost for emissions compliance. How much of this cost can be absorbed, and how much will be passed on to customers?
We can be very disciplined on pricing, but at the end of the day, it doesn't matter. All we can do is be the most profitable, so you don't get hit immediately by the costs of governments not investing in a charging network, not subsidizing sales of electric vehicles appropriately or doing the wrong thing in terms of regulations. So either we digest these costs or we are able to increase productivity. Or we can't, and somebody will get hurt.
How is it possible to reduce emissions and a company's carbon footprint while simultaneously protecting margins and employment?
I don't think there is a magic formula, but citizens should understand that the cost for reducing emissions will be paid by them, either through taxes or through reducing their freedom of mobility, from an affordability standpoint. People want better crashworthiness, they would like to have less or zero emissions, they would like to have more connectivity and more convenience, but nobody wants to pay for it. So somebody will have to make the hard choices.
We have heard companies from Apple to Ford say that the move toward autonomous driving is more expensive and more risky than we thought. What is your position on how the technology will develop?
We have been very clear in saying that we don't see value in driver-assistance systems beyond Level 3 [in which a driver must be ready to take control if needed] for affordability reasons, viewed from the private customer. Beyond that, the cost skyrockets and value doesn't increase proportionally. That means there's no business case for retail sales beyond Level 3.
Now, we continue to work on Level 4 or Level 5 [when the car has control in most or all situations] for shared mobility, such as shuttles. That's because these vehicles will be shared among many users, so they can be more expensive. They will be used in simplified environments with dedicated lanes with clear signage. That will also make the validation of the software easier, and there will be fewer scenarios to test against.