As brands like China's BYD (BYDDY) highlight the issue of affordability in the ever-changing EV game, multinational Detroit Big Three automaker Stellantis (STLA) is looking to make a move that not only positions itself strategically with the competition, but also fulfills a promise broken by none other than Tesla's Elon Musk.
As per a new report by CNBC, Stellantis CEO Carlos Tavares revealed that a new, $25,000 Jeep-branded EV will be hitting stateside shores "very soon," as part of its efforts to attract more mainstream buyers amid a slower EV rollout in the U.S.
Though the figurehead did not go into vehicle specifics, he mentioned that he wanted to emulate the success of the company's Citroen e-C3 SUV, a small, compact crossover SUV that sells for the equivalent of $25,200 in Europe.
“In the same way we brought the €20,000 Citroen e-C3, you will have a $25,000 Jeep very soon,” Tavares said during a May 29 fireside chat at the Bernstein 40th Annual Strategic Decisions Conference. “We are using the same expertise because we are a global company and this is totally fluid across the engineering world of Stellantis.”
Currently, Stellantis' Jeep brand does not sell any electric vehicles in the U.S. Its sole electrified offering is its line of 4xe plug-in hybrid vehicles, but the brand is set to reveal the all-electric Wagoneer S, as well as the Wrangler-inspired Recon later this year.
At the conference, Tavares emphasized that affordability is important to the brand, especially as rivals like China's BYD threaten the market with their cheap EVs and plug-in hybrids. He gave a timeline of "three years, max" for Stellantis to improve its cost parity between its traditional gas-powered cars and its electric cars in the wake of what he dubs a "China invasion."
“It’s a very challenging period, very chaotic, very Darwinian,” Tavares said about his Chinese competition. “We are in the storm, and this storm is going to last a few years.”
However, in line with his previous comments about tariffs on Chinese vehicle imports, he still says that tariffs on Chinese imports might delay their stateside entry, but won't stop them entirely.
“Yes, time helps, but you cannot stop the competition,” Tavares said. “Putting you behind a protectionist bubble is not going to help you to be competitive. … If your strategy is to shrink and stay inside of the bubble, it will buy you time, but certainly it will cut your future.”
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Banking on Elon's broken promise:
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The Stellantis boss's announcement is an about-face from the decisions of Tesla's (TSLA) Elon Musk, as it seems that the company's new ventures has shyed away from core ethos that the company held since 2006.
Elon's has long teased plans for a $25,000 Tesla, but on April 5, Reuters reported that Tesla called off the plans for the affordable model, dubbed Model 2. Citing three unnamed sources familiar with the matter, as well as internal documents, the decision to swap the sub-$25,000 model came in February 2024.
In separate instances, both CEO Elon Musk and Tesla design boss Franz von Holzhausen have struck down the reports using similar language.
In response to the report, CEO Elon Musk wrote in a post on X (formerly known as Twitter) that "Reuters is lying (again)."
Reuters is lying (again)
— Elon Musk (@elonmusk) April 5, 2024
At a Q&A at the Petersen Automotive Museum in Los Angeles on April 7, Tesla design boss Franz von Holzhausen told an attendee to "stay tuned," and to “don’t always believe what you read.”
Franz @woodhaus2 on the new rumored $25,000 future Tesla pic.twitter.com/eAK7u3wxUI
— Zack (@BLKMDL3) April 7, 2024
At Tesla's earnings call on Tuesday, Apr. 23, Elon Musk alluded to the company shifting its priorities away from electric vehicles to a robotics and AI firm focused on robotaxis and encouraged investors who didn't believe in his vision to divest from his company.
“We should be thought of as an AI robotics company. If you value Tesla as just an auto company — it’s just the wrong framework. If you ask the wrong question, then the right answer is impossible," Musk said. "If somebody doesn't believe that Tesla is going to solve autonomy, I think they should not be an investor in the company. And we will. And we are."
Though Tesla's upcoming August 8 event can provide a window into whether Tesla has entirely pulled away from "more affordable" vehicles, Stellantis taking up the opportunity to hit the downmarket with a $25,000 mass-market car can prove to be gold in the end.
During the earnings call of Detroit-area rival Ford on Wednesday, Apr. 24, CEO Jim Farley says that he still bets on "a new small, affordable" car because they know people will buy it.
“Well, when we look at the connected car data from our EV customers, we notice that people live in the suburbs, urban customers, they tend to drive shorter distances, and those more affordable vehicles, more approachable, and we believe that's where the adoption of EV will go the fastest,” said Farley. “We believe we can compete in segments of small cars and vehicles, more affordable vehicles in a unique way that's Ford.”
“We learned a lot when we -- in our more expensive vehicles, Mach-E, when in February we dropped the price 17%, our volume went up 141%. That's telling us that the more affordable we can make a great product, the more attractive it is to these mainstream EV adopters.”
At the time of this writing, Stellantis, trading under STLA on the New York Stock Exchange, is up 2.13% today, trading at $22.28 a share.
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