He blames “external pressure” for the march into oblivion, and he’s not wrong…
Most people these days are shocked at how much new and even used cars cost. Price inflation has become a fact of life when shopping for a vehicle, but Stellantis CEO Carlos Tavares is sounding the alarm that things could get much, much worse thanks to the push for electrification. Depending on your view, you might be thinking this is shocking, old news, or absolutely enraging considering what Dodge CEO Tim Kuniskis has been telling the media lately.
Check out Toyota’s warning about rushing into electrification here.
According to Tavares, electric cars could come with “50% additional costs against a conventional vehicle.” He astutely observed that increasing the retail price of vehicles by 50% would mean most of the middle class wouldn’t be able to shoulder the cost. This might be an astounding revelation for those who have believed the line that EVs will be cheaper than traditional cars. Others are sitting there nodding, asking if increased costs aren’t the whole point of electrification. After all, those really pushing for “progress” seem to have utter disdain for the middle class.
He then went on to comment on how automakers would be forced to either charge those significantly higher prices for EVs and in turn sell fewer cars to more affluent customers or alternatively sell cars with narrower profit margins, eating part of the costs. Both sound like a bad deal for consumers, particularly for those who are in the middle class. Funny how many of these “green” initiatives do that.
Tavares also mentioned that governments and investors pushing automakers to jump fully into electrification is leading to costs “beyond the limits” of what automakers can endure. Those of us who have been pointing this fact out for years have endured being called technophobes, anti-progress, anti-science, and whatever other insults could be conjured up.
In addition, Tavares made an appeal for governments to be more realistic in their aggressive push to regulate the internal combustion engine into oblivion. He pointed out time is needed to properly test the emerging technologies and correct issues surrounding quality. Now, the Tesla crowd will likely scoff at that, but most of them aren’t even honest about the shortcomings of the cars they borderline worship.
I’ve been pretty tough on Stellantis for its many missteps, so I’m not even close to some unquestioning fan of the automaker, but I’m really liking Tavares far more than I thought I would. He’s brave enough to say what so many others in the industry know but are too scared to state out loud. The only other major automaker which has spoken up on this topic that I can recall is when a Toyota executive sounded the alarm back in March (I covered that as was well here).
The true irony is part of the reason why Stellantis even exists is to better handle the increasing costs of electrification. The late FCA CEO Sergio Marchionne talked about this topic almost nonstop as he awkwardly and unsuccessfully courted just about every major automaker in the world for a merger. He also hilariously begged consumers to not buy the all-electric Fiat 500 since it was such a money suck for the company. It was only after his death that FCA was able to arrange a merger with French automaker PSA Group, creating one of the largest automotive manufacturers out there so it would have the economies of scale to handle electrification-related costs.
The adoption of all-electric powertrains may or may not be the future of the automotive industry: that remains to be seen. But the fact is there are many challenges in electrification which need to be ironed out. Governments can’t just issue mandates or pass laws to alter this reality. Instead, it’s the citizenry who are harmed by this incessant march to electrification, costs and other problems be damned. Perhaps it’s time for everyone to let their elected officials know how they feel about the current automotive regulations which threaten to make inflation far worse.