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Stellantis “In the Black” on EV, Says CEO, But Tavares Warns Other Automakers Could Be Forced Out by Losses

by | December 7, 2023

With rare exception EVs have been big money-losers for the auto industry. But there are a few exceptions, starting with Tesla. Now, Stellantis CEO Carlos Tavares says his company’s electrified vehicles also are “in the black.” Speaking at an industry conference, Tavares warned automakers that can’t improve margins could be forced out of business by the end of the decade.

Tavares speaks at CES 2023 No. 1

Stellantis CEO Carlos Tavares revealed the company is 100% in the black on its EV sales — unlike its competitors.

It’s become conventional wisdom that automakers can’t make money on battery-electric vehicles, at least not yet. During a third-quarter earnings conference, Ford officials said their company is losing about $37,000 for every EV it sells.

Tesla has been the rare exception, the automaker posting substantial profits in recent years. But a second manufacturer also appears to be charging up its EV earnings, Euro-American Stellantis, the automaker’s chief executive officer said during an appearance at the Goldman Sachs’ 15th Annual Industrials and Autos Week in New York.

Stellantis “in the black”

“We are in the black, both in the U.S. and in Europe,” Stellantis CEO Carlos Tavares said during the conference. “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.”

2025 Ram 1500 Rev debut Tavares and Koval NYIAS 2023

Stellantis turning a profit on every EV it sells bodes well for the Ram 1500 REV, arriving in the U.S. in 2025.

While he might be optimistic about the future of the Stellantis EV program, Tavares was less upbeat about the industry, as a whole.

But other familiar brands could vanish

“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,” manufacturers who can’t get a grip on costs “are going to put themselves in trouble quite quickly,” Tavares said. “And in that case, a shorter period of time for them.”

He warned that some familiar brands may not make it through the transition to EVs and could vanish by the end of this decade.

Tavares gestures at CES 2023

Tavares said some automakers are going to be in real trouble before the end of the decade.

Tavares didn’t provide hard numbers on Stellantis’ EV operations, nor did he indicate whether they are in the black in other markets. But any indication that major automakers can turn profits on EVs is seen as a good sign, especially considering the hefty investments they are making.

Stellantis betting on low-cost Chinese partner

Stellantis itself recently announced plans to take a 20% stake in Chinese EV manufacturer Leapmotor and will jointly form a new, international unit giving Stellantis exclusive rights to market the brand outside of China.

In his comments at the Goldman Sachs conference, Tavares indicated Leapmotor will be “30% more cost competitive than anything you can figure out in the Western world.” As a result, he added, “We are going to bring those Chinese cars to European markets in a profitable manner.”

Tavares gripngrin for Leapmotor REL

Tavares said the partnership with Leapmotor would allow it to lower costs on vehicles built in China and sold in Europe.

Tesla is still considered the world’s most profitable EV manufacturer — though some Chinese ventures are gaining traction.

The Texas-based company has actually seen its margins slip this year as its sales growth has slowed and it has rolled out a number of price cuts aimed at rebuilding momentum. Those discounts have made it more difficult for competitors to gain financial traction, according to industry analysts.

Upcoming elections could be critical

Further complicating matters, the growth of EV sales has slowed in recent months, especially in the U.S.

Tavares said the 2024 elections for U.S. president and the European parliament could play a critical role in the market. President Joe Biden has been a strong proponent of electrification. His likely challenger, former President Donald Trump, is expected to roll back federal rules favoring EVs if he returns to the Oval Office.


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