Stellantis will avoid brutal price cuts, CEO says, ET Auto

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Tavares also said the Red Sea disruption would not change Stellantis’ sourcing strategies, as supplies from Far-East are key for vehicle affordability.

Stellantis must avoid being drawn into a price war that would destroy profitability and might eventually make many automakers takeover targets, CEO Carlos Tavares said on Friday.

Presenting the group’s new platform for large battery electric vehicles (BEV), Tavares said Stellantis, which is among the most profitable companies in the industry, was comparatively protected from a downtrend in prices that could put some rivals “in trouble”, with persistent losses and at risk of becoming takeover targets.

“If you go and cut pricing disregarding the reality of your costs, you will have a bloodbath. I am trying to avoid a race to the bottom,” he said.

“I know a company that has brutally cut pricing and their profitability has brutally collapsed,” he said, without elaborating.

Earlier this week, rival BEV maker Tesla slashed prices of its Model Y car across Europe, a week after it cut prices in China in the face of uncertain electric-vehicle demand.

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Red Sea Disruptions

Tavares said he did not see major impacts from disruptions to shipping in the Red Sea, as it was mostly a matter of waiting a little longer for supplies.

“The travel will be longer, that’s true if you go around Africa. It may have an impact on the cost (…) so there may be good discussions about the cost and how we should mitigate that. But at this stage, I don’t see any other impact than that one,” he said.

“Of course, some of our competitors may have had some issues with that. It’s not our case. So far, it’s okay. Things are moving well,” Tavares added.

Tesla and Volvo Car have said they were suspending some production in Europe due to a shortage of components caused by Red Sea shipping problems, while Stellantis previously said it was relying on air freight to cope with temporary disruptions.

Tavares also said the Red Sea disruption would not change Stellantis’ sourcing strategies, as supplies from Far-East are key for vehicle affordability.

“Western consumers (…) want affordable BEVs,” he said. “Anything that can ensure a better price will be exactly on the spot of what we should be doing”.

  • Published On Jan 20, 2024 at 03:04 PM IST

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