Stellantis EVs are profitable in U.S., Europe, Tavares says

Stellantis is "in the black" on electric vehicles in the U.S. and Europe, CEO Carlos Tavares said.

Tavares said automakers have to be "super sharp on cost" to achieve good profits on EVs. To attract middle-class consumers, Tavares said EVs will need affordable but profitable pricing at the core of the market.

"This is an equation you can only solve if you reduce cost, and this is what we are reasonably good at," he said during a Goldman Sachs conference on Wednesday.

Tavares said Stellantis is "fighting head-on" with Tesla for sales in Europe. CFO Natalie Knight said Stellantis has overtaken Tesla as Europe's No. 2 EV seller.

Tavares pointed to the upcoming Citroen e-C3, priced at €23,300 ($25,100), saying it will be a profitable vehicle. The small EV is built on Stellantis' low-cost "smart car" platform.

Stellantis aims to have more than 75 battery-electric models globally by 2030, including more than 25 in the U.S. The automaker's EV push in the U.S. begins with models such as the Ram ProMaster van, Ram 1500 REV and the Jeep Recon.

"The fact that we try continuously to levelize the margins between BEVs and ICE is not new. We have been working on that for several years now, and I would say that we are achieving results," Tavares said.

He added: "The first thing is that we are in the black, both in the U.S. and in Europe. Our margins on electrified vehicles are in the black. That's a good thing. We are closing the gap against ICE faster in Europe than in U.S. because we started sooner, but we are achieving results and we see that all of this is going to be exciting."

Tavares said the deal it struck recently with Chinese EV maker Leapmotor will deliver profitable electric models to European consumers. Stellantis in October said it was investing $1.5 billion for a 20 percent stake in Leapmotor.

The deal calls for the formation of Leapmotor International, a Stellantis-led joint venture that has exclusive rights for the sale of Leapmotor products outside China.

"We are consolidating the Leapmotor business outside of China, which is starting with a sourcing point which is 30 percent more cost competitive than anything you can figure out in the Western world," Tavares said. "You start with the minus-30 percent and through an export company outside of China that we control and we consolidate, we are going to bring those Chinese cars to European markets in a profitable manner."

Tavares said the outcomes of the 2024 elections for U.S. president and European Parliament could prompt an acceleration of EV demand or slow down adoption. Automakers will need to manage what could happen in either scenario, he said.

If policy changes lead to a slowdown in the transition to electrification, Tavares said the industry could experience “bumps in the road.” But if pro-EV candidates win, pressure could build on automakers to make those vehicles profitably.

If EV growth “is not bumpy, and it continues on the linear way, the guys who are not able to make money with EVs are going to be in trouble very, very soon,” Tavares said. “Because if it's purely linear, with the amount of capital that you need to fund for products, which structurally are less profitable than the ICEs, they are going to put themselves in trouble quite quickly.”