DETROIT, Mich. (WTVO) — Stellantis Chief Executive Carlos Tavares issued a warning that pressure on automakers to make an accelerated shift to electric vehicle production could push the industry “beyond the limits” of what it can sustain.
The move, Tavares said in an interview with Reuters, would result in cutbacks that could jeopardize jobs and vehicle quality.
“What has been decided is to impose on the automotive industry electrification that brings 50% additional costs against a conventional vehicle,” he said. “There is no way we can transfer 50% of additional costs to the final consumer because most parts of the middle class will not be able to pay.”
To achieve President Joe Biden’s goal of 50% EV sales by the year 2030, Tavares said carmakers could either charge higher prices and sell fewer cars, or accept lower profit margins – both of which would lead to cutbacks, which could result in the loss of tens of thousands of jobs worldwide.
The United Kingdom has set a 2030 deadline for going all-electric, with the European Union settling on a date of 2035.
Tavares said Stellantis is preparing to avoid cuts by boosting productivity. “Over the next five years we have to digest 10% productivity a year … in an industry which is used to delivering 2 to 3% productivity.”
“The future will tell us who is going to be able to digest this, and who will fail,” Tavares said. “We are putting the industry on the limits.”
Stellantis, which operates the FCA Belvidere Assembly Plant, and other automakers are under pressure from electric automaker Tesla, and startups like Lucid and Normal, Illinois-based Rivian.
Of the legacy automakers, General Motors has a 10-year head start on Stellantis in the electric vehicle field, beginning with production of the electric-hybrid Chevrolet Volt in 2011. GM has leveraged its lead time R&D to develop it’s next generation Ultium platform technology, which is expected to launch in passenger vehicles with the release of the Cadillac Lyriq SUV and GMC Hummer EV in 2022.
Tavares said Stellantis has committed $33 billion through 2025 to develop new electric vehicle architecture and battery plants.
On Tuesday, Stellantis, which was formed in 2021 by the merger of Peugeot and Fiat Chrysler, announced it has invested in battery maker Factorial, along with German manufacturer Daimler.
“The future will tell us who is going to be able to digest this, and who will fail,” Tavares said. “We are putting the industry on the limits.”