Car Market Will Collapse If EVs Don’t Get Cheaper – Stellantis

After a landmark agreement to phase out combustion engines, one of Europe's largest automakers warned that the industry is doomed unless electric vehicles become less expensive.

Stellantis NV aims to reduce the cost of producing electric vehicles by 40% by 2030, according to Chief Manufacturing Officer Arnaud Deboeuf. The Fiat and Peugeot manufacturer intends to manufacture some parts in-house and to put pressure on suppliers to reduce the price of their products.

If EVs don’t get cheaper, “the market will collapse,” Deboeuf said at the company’s Tremery factory in France. “It’s a big challenge.”

Stellantis intends to launch more than 75 fully electric models this decade and to convert at least some of its French car plants to produce EVs. While the company is spending a lot of money on the rollout, it promises to keep the returns high by relying on extra revenue from software and services, as well as some premium vehicles.

EV prices are rising at an alarming rate these days. Tesla Inc. raised prices by up to $6,000 per vehicle this month, following similar increases by Rivian Automotive Inc. and Ford Motor Co. earlier this year. Rising raw-materials costs have rendered some battery-powered vehicles unprofitable, according to Ford Chief Financial Officer John Lawler, who spoke at an investor conference earlier this month.

This week, European Union countries backed a push to eliminate carbon emissions from new cars by 2035. With EU lawmakers in favour of eliminating the use of fossil fuels in the automotive industry, it is highly likely that most manufacturers will be forced to switch to producing EVs in less than a decade.

While Stellantis will comply with the decision, policy makers appear to “not care” whether automakers have enough raw materials to underpin the shift, Chief Executive Officer Carlos Tavares said Wednesday.

Greater demand for EV batteries between 2024 and 2027 — when more European capacity is expected to come online — will benefit Asian producers while "putting at risk" Western cell output, Tavares said during a factory visit in Metz, northeastern France.

Stellantis is building five large battery factories in North America and Europe with the goal of producing 400 gigatonnes of cells by 2030. He also stated that the company will not rule out purchasing a mine to secure raw-material supplies.

Stellantis is also considering how much energy it can produce on its own to cushion rising prices in the event of supply disruptions caused by Russia's invasion of Ukraine