Stellantis CEO Carlos Tavares has underscored the importance of avoiding a price war within the automotive sector, emphasizing the potential threat to profitability and the risk of automakers becoming takeover targets. Tavares made these remarks on Friday during the unveiling of Stellantis’ latest platform for large battery electric vehicles (BEVs).
Positioning Stellantis as one of the most profitable companies in the industry, Tavares expressed confidence in the company’s resilience against a downturn in prices that could pose challenges for other players in the market. He warned against hasty price cuts that ignore the reality of production costs, stating, “If you go and cut pricing disregarding the reality of your costs, you will have a bloodbath. I am trying to avoid a race to the bottom.”
While refraining from providing specific details, Tavares referenced a company that experienced a sharp decline in profitability after implementing drastic price cuts. This comes in the wake of Tesla’s recent reduction in prices for its Model Y in Europe, responding to uncertainties in the electric vehicle (EV) market demand.
Addressing concerns about disruptions in shipping through the Red Sea, Tavares downplayed potential impacts on Stellantis, stating that any delays in supplies would only result in slightly longer waiting times. He acknowledged the potential for discussions regarding cost mitigation due to prolonged shipping but asserted that, as of now, no significant impacts were foreseen.
Tavares also commented on the temporary production suspensions by Tesla and Volvo Car in Europe, attributing them to component shortages caused by Red Sea shipping issues. Stellantis had previously communicated its reliance on air freight to manage such temporary disruptions.
Highlighting the sourcing strategies, Tavares affirmed that the Red Sea disruption would not alter Stellantis’ approach, emphasizing the significance of supplies from the Far East in ensuring the affordability of electric vehicles. He noted, “Western consumers want affordable BEVs, and anything that can ensure a better price will be exactly on the spot of what we should be doing.”
