Stellantis Quashes Hot Streak for Carmakers Plotting EV Splurges

(Bloomberg) -- It all started with the ebullience leading up to Tesla Inc.’s Battery Day. Then General Motors Co., Volkswagen AG and Ford Motor Co. staged briefings on electric-vehicle ambitions that sent their shares soaring.

This week was supposed to be Stellantis NV’s turn. Instead, plans to splurge 30 billion euros ($36 billion) on EVs and software were met with shrugs. Its stock slumped more than 3% in Paris and Milan on an ugly trading day for the broader market.

While the auto giant formed via the merger of Fiat Chrysler and PSA Group isn’t lacking in initiative, the event Stellantis staged on Thursday was “a little lighter on details” compared with the overall battery strategies laid out by Tesla and VW, said James Frith, an analyst at BloombergNEF.

Chief Executive Officer Carlos Tavares delivered a nuanced message during his portions of the company’s more than 2 1/2-hour-long presentation. Stellantis will be ready to deliver fully electric vehicles where demand, state support and regulatory pressure is highest. But for regions and segments less far along in embracing EVs -- namely in North America and with pickups -- the carmaker will bide its time.

“There is still the perception that, all of the sudden, consumer pull will shift the market immediately to EV, and some automakers will miss out,” said Kevin Tynan, an analyst at Bloomberg Intelligence. “Some manufacturers are angling that they’d rather be late and sure that the demand and profitability is there, than be early and wrong.”

Here are some of the key takeaways from Stellantis’s EV Day:

Batteries

Stellantis intends to source more than 260 gigawatt-hours of batteries from five factories in Europe and North America by 2030. All of the supply will be built up with partners, a strategy similar to that of French rival Renault SA and somewhat in contrast with plans by Tesla and VW to make some cells in-house.

Almost two-thirds of the capacity Stellantis has planned will be in Europe, with Tavares announcing a third plant for the region will be located at what is now an engine factory in Termoli, southern Italy. That’s close to assembly lines at Melfi, which could be re-jiggered to churn out as many as 400,000 vehicles a year.

A venture with oil giant TotalEnergies SE is slated to start producing cells at French and German sites in 2023 and 2025 for a total capacity of 50 GWh by the end of the decade. The company described advanced talks with a U.S. partner for another plant, while the location of the fifth installation remains unknown.

Prices

Stellantis did give targets on how much it aims to cut battery costs: its goal is to lower pack prices more than 40% by 2024 and an additional 20% by 2030.

BloombergNEF estimates the company could reach $82 per kilowatt-hour by 2024, which is “impressive” and about 10% below the expected industry average that year, Frith said.

Stellantis’s commitment to equip affordable EVs with batteries that don’t use nickel and cobalt should help shield the company from potentially costly supply constraints related to those metals, he said. It also plans to introduce solid state batteries -- a type of chemistry VW and others think could deliver cost and range breakthroughs -- in 2026.

Europe

With the European Commission set to unveil a target on July 14 to become climate neutral in 2050, the auto industry is bracing for a possible ban on vehicle emissions by 2035. Stellantis is ready, Tavares said, although he’s keeping plug-in hybrids in the mix due to uncertainty about how quickly consumers will make the transition to battery-electric models.

The company’s sales outlook for the end of the decade implies 55% of European sales could be EVs, 15% could be plug-ins, and the remaining 30% could have combustion engines, according to RBC Capital Markets analyst Tom Narayan.

Brands for the region will be electrified at varying speeds, with Opel the only one singled out for pure-EV status by 2028. Electric Opel models will be exported to China, and the 1970s-era La Manta will be revived as an EV.

Fiat is also destined to become 100% electric, although no firm timeline was set. Peugeot appears prepared to hang on to plug-ins for longer.

North America

Stellantis’s most valuable model lines -- Jeep sport utility vehicles and Ram pickups -- won’t be ditching the internal combustion engine completely anytime soon.

By 2025, Jeep will have a fully electric model for every SUV segment, and 70% of its vehicles will be electrified. Initially, this will mostly entail plug-in hybrid versions of models such as the Wrangler and Grand Cherokee.

Ram won’t offer an electric pickup until 2024, meaning Stellantis could give GM, Ford, Tesla and upstart Rivian Automotive Inc. a head-start of several years.

“Stellantis’s measured walk to EV pickup trucks may seem late if considering competitors will be humming in 2023 -- but there is no guarantee that will be the case,” BI’s Tynan said. “Electrification has certainly not been a light switch of high demand in any segment to this point.”

©2021 Bloomberg L.P.