Stellantis NV Boss Carlos Tavares Sounds Warning on EV Pricing

In a move that has sent shockwaves through the automotive industry, Carlos Tavares, CEO of Stellantis NV, has warned carmakers against cutting electric vehicle (EV) prices too quickly. Speaking just hours after Ford announced it was reducing production of its battery-powered F-150 Lightning pick-up truck due to weaker sales, Tavares cautioned that rapid price cuts could lead to a "bloodbath" in the industry.

Ford’s Decision to Cut Production

Ford’s decision to cut production of the F-150 Lightning comes as EV sales continue to rise across the world, albeit at slower rates than expected. The market share of EV sales in the United Kingdom and Europe fell last year, while growth in the US has slowed. Despite this, 1.2 million EVs were sold in the US in 2023, including 317,168 in the fourth quarter.

Stellantis’ Warning

Tavares led out Tesla, which has cut prices multiple times over the past year to stimulate demand, igniting a price war with Ford. However, this move has seen a slide in Tesla’s profits at the same time. "I know one company that has brutally cut pricing, and their profitability has brutally collapsed," he said.

Consequences of Price Wars

When companies consistently lose money, they become potential targets for consolidation, Tavares warned. He added that he did not rule out further acquisitions by Stellantis in the future. The company was formed by the merger of Peugeot owner PSA and Fiat Chrysler.

Impact on Industry

The warning from Tavares comes as the industry struggles to balance profitability with growing demand for EVs. Rapid price cuts can lead to a vicious cycle of discounting, which can ultimately harm manufacturers’ bottom lines.

Market Trends

Despite the challenges facing the industry, EV sales continue to rise across the world. In the US, 7.6% of domestic car sales were electric in 2023, up from 5.9% in 2022. However, growth rates have slowed, with a 40% increase in sales in the last three months of 2023 compared to the same period a year earlier.

Conclusion

The warning from Tavares highlights the need for caution in the face of rapid price cuts. As manufacturers continue to invest heavily in EV production, they must balance profitability with growing demand. The consequences of price wars can be severe, and manufacturers would do well to heed Tavares’ warning.

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