AUTONEWS

Stellantis CEO cries in despair, Elon Musk is smiling...

Battery-powered electric vehicles have been involved in a particularly violent price war, the likes of which have never been seen in recent decades in the automotive industry. Faced with a succession of discounts, which customers welcome with open arms because it reduces their effort when purchasing, some builders shake their heads, afraid that the price cut will pinch their profit margin. This comes in connection with the recent presentation of Stellantis' STLA Large platform, the second after STLA Medium, also intended for electric vehicles, an event in which CEO Carlos Tavares took the opportunity to share his concerns about the consequences arising from the price war between electric vehicles.

According to Reuters, the Portuguese CEO of Stellantis warned that “when we cut prices, without paying attention to costs, we end up causing a bloodbath”. And to understand exactly who he was referring to, without however naming names, Tavares elaborated a little more: “There is a builder who is cutting prices brutally and his profit margin has also fallen brutally.”

These statements were seen as a “sting” to Tesla, especially since they took place in the USA, but the reality is that the Stellantis strongman could have a second target in mind. For example, Renault (a former Portuguese company) has cut the price of the electric Mégane E-Tech by more than €5,300 in recent weeks, which puts it well below Stellantis' proposals in the C segment.

The criticisms of Stellantis regarding the Tesla price reduction, as well as the other manufacturers who lowered the value of their models (and there were many), end up not making much sense. Carlos Tavares claims that the brutal reduction in prices, without looking at costs, led to an equally brutal reduction in profits, but analyzing the results for 2022 – those for 2023 are not yet available –, Tesla sold 1.3 million vehicles, the which ensured 11.5 billion euros in net profit and an increase of 127.8% compared to 2021. Meanwhile, Stellantis sold 6 million vehicles in the same year through its 14 brands and achieved a net profit of 16 .8 billion euros, which represented an increase of 26% compared to 2021. Now, this points to a net profit margin per vehicle three times higher for the North American brand, as well as a growth rate practically five times higher higher.

What is important to remember here is that electric vehicles have already achieved a price balance in the most expensive segments and involving larger vehicles and higher powers, that is, in segments D and E. But in the most popular segments (B and C) , with smaller and more accessible vehicles, battery-powered cars are still too expensive. The price drop at Tesla helped to achieve balance in the D segment, while the Mégane's reduction gave good signs in the C segment, but the price of these models still has to fall much further. Especially because with the arrival, this year, of segment B utilities for prices starting at €25,000, the jump to €37,000 for the Mégane – considering the version with a range of 470 km (more than 400 km can be considered the average for this segment), since there is another more affordable version, on sale for 32 thousand euros, limited to 300 km –, it is too high, so price reductions should continue.

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