Going into 2024, I have to admit I did not have "doomsday vibes" on my Bingo card. But a "toxic cocktail," as it's being called, of labor costs, sinking sales, high interest rates, the cost of going electric and intense competition from China has absolutely rocked Europe's automakers. Today, Volkswagen, Mercedes-Benz, Aston Martin and Stellantis have all warned investors that they're now looking at lower profits and sales than originally projected for this year.
Today on Critical Materials, our morning roundup of news about tech and the auto industry, we're going to highlight Stellantis in particular and look to the future as CEO Carlos Tavares' days appear to be numbered. (Eventually, anyway.) Also on tap: even China's automakers aren't taking off in Europe as expected, and General Motors' dealers get lessons in EV education.
30%: How Do You Solve A Problem Like Stellantis?
For starters, Stellantis is an enormously weird company. "Founded" in 2021 with a merger of Fiat Chrysler (itself a merger of a company that had been through several, on both ends) and the PSA Group that owned the Peugeot, Citroën, DS, Opel and Vauxhall brands, it's hard to find any true connective tissue in any of its sprawling operations. Based in the Netherlands
I have sometimes sarcastically called it a "French private equity company," but that doesn't feel entirely wrong, either.
That's a lot of brands to serve. Sure, the plan offers tremendous manufacturing scale and shared costs, if done right. But aside from all the stuff in Europe I listed above, one major problem is that the North American brands that pay half of Stellantis' bills—Jeep and Ram—have been quite neglected in terms of new products that are priced to win over mainstream car owners. The vehicles got way too expensive and buyers are saying "no thanks." And as Stellantis deals with job cuts, labor unrest and furious dealers, no one seems to be happy with the state of things.
None of this feels like it bodes particularly well for these brands all being able to make the electric transition.
People are especially unhappy with Carlos Tavares, the cost-cutting chief executive who's paid a staggering $39 million in total compensation. Tavares' contract with Stellantis is up in 2026 and multiple reports indicate the company is looking for a successor. Problem is, there's no obvious choice there. From the Financial Times:
Although two people familiar with the process said the search was not directly related to the company’s performance, Stellantis reported a 48% decline in net profits for the first half of 2024 compared with the same period last year. The shares have fallen 47% from their peak, while vehicle inventories have piled up in North America. Disgruntled factory workers in Italy and the US have threatened strikes following steep production cuts.
Only six months ago, by contrast, Stellantis was considered an industry winner and briefly overtook German rival Volkswagen in market value. The group, born out of a 2021 merger between Fiat Chrysler and France’s PSA, owner of Peugeot, boasted a strong balance sheet, a vibrant US operation and a flexible electric strategy.
Yet analysts said the company was still setting itself a formidable challenge in trying to replace a highly regarded leader who had built the company around himself. Jefferies analyst Philippe Houchois said it was “very healthy” for a company to think about succession.
But he added: “What’s not clear is who is the person to replace him. At companies where there are collegial or shared management styles, there are people in key functions. At Stellantis, you have Tavares and 30 different people who report to him.”
Another person who has worked with Tavares said: “He’s cleared the decks a bit internally around him and there’s no natural internal successor.”
Chris Donkin, managing partner at executive search firm Savannah, said it was difficult to see any automotive chief executive other than Tavares leading such a “complex agglomeration of companies”.
“He is the one who built it,” Donkin said, adding that the board might need to look outside the automotive industry for strong candidates.
Tavares built this weird, complex, international machine together, even if it hasn't been working especially well lately. Anyway, he made his name with cost cuts, but now is a time that calls for intense investment in powertrain tech to get ready for a future that doesn't involve internal combustion.
I don't know what the answer is here, and the problem is that no one seems to, either.
60%: Chinese EVs Take A Hit In Europe
On its surface, it may seem like the Chinese automakers flooding into Europe with more affordable, high-tech cars are the biggest problem for the native car companies. But that's only part of their challenges. Economic conditions in Europe as of late haven't been great for the Chinese newcomers, either.
Here's Bloomberg on some headwinds in Europe that you might not have expected:
Chinese manufacturers sold the fewest electric cars in 18 months to customers across Europe, with registrations falling by nearly half in August from a year earlier.
The 48% drop led to the second straight month of declining share for Chinese brands, based on figures provided by researcher Dataforce. MG, the British nameplate that’s now part of SAIC Motor Corp., lost its top spot across Europe to Chinese rival BYD Co., according to Jato Dynamics, which also tracks the automotive market.
Why? Because EV purchasing incentives are drying up in several countries, and buyers are worried about new anti-China tariffs jacking up prices.
Automakers are still weighing the potential impact of the EU tariffs, which affect all EVs imported from China, including those from non-Chinese companies BMW, Stellantis and Tesla. The added duties are set to be finalized by November, pending a member-state vote, with negotiations between Beijing and Brussels taking place amid furious lobbying.
“There is nothing clear regarding the role of the Chinese EVs in Europe,” Munoz said. “Although there are many plans and announcements, there is even more uncertainty around their future and how Europe will react to the increasing competition.”
Bloomberg News reported on Friday that China’s Chery Automobile Co. has pushed back a goal to start building EVs at a plant it’s taken over in Spain by one year to October 2025, as the company weighs the amount of work to be carried out at the Barcelona site.
This moment in the auto industry isn't apocalyptic like 2008 or even early 2020, but it doesn't feel great.
90%: Chevrolet Ramps Up Dealer Training For EVs
I sound like a broken record on this front, but I maintain that U.S. car dealers are going to be a bigger barrier to widespread EV adoption than automakers want to admit (or can admit publicly.) As a group—certainly not a whole, but more often than not—they're resistant to the electric transition, unwilling to invest in charging or train staff on how these new kinds of cars actually work.
GM is again taking a page out of Ford's playbook to try to train sales staff better on EV tech. It needs to do this as it undertakes a vast expansion of its EV lineup, and as many models bring in new customers to the Chevrolet and Cadillac brands. Here's Automotive News:
To get customers comfortable with electric vehicles, Chevrolet says dealership salespeople first need to get comfortable with electric vehicles.
Chevy aims to improve staffers' product knowledge and confidence through a nationwide EV training program expected to draw 7,000 dealership employees. Hosted throughout the summer and fall in five states, the program combines educational sessions designed to dispel common myths with opportunities to drive EVs — from General Motors and from rival automakers — and compare the experience with that of gasoline-powered vehicles.
"We've had live drive events in the past. We've done five-city tours before. But this is the first time that we've been so EV-focused," said Michael MacPhee, Chevy's director of sales operations.
[...] The program covers topics including range and charging infrastructure, MacPhee said. For instance, trainers explain the energy recovery technology on GM EVs that improves range in cold weather, the long-term cost of EV ownership compared with an internal combustion vehicle, and how easily a vehicle with a 300- to 400-mile range can accommodate drivers who average 25 miles a day.
"What can move the needle on getting into an EV? Cost of ownership is one of our biggest levers that we can pull," MacPhee said. "Even with the electricity costs, savings on fuel can easily save you $100 a month. And as you get into the larger vehicles, like Silverado, that's even more true. So that's one that's really been resonating well with our sales professionals."
Lately I've been thinking a lot about how many automakers just kind of expected people to show up to their EV offering, rather than thinking in novel ways to stress the benefits to breaking up with gasoline. It's good to see GM trying things here too.
100%: You Are The New CEO Of Stellantis. What Do You Do?
Congratulations! You are now the new Car Dad or Car Mom of Stellantis and all 14 of its brands. With any luck, you're pulling in Tavares' $39 million payday, but that means you have to sort out all these problems. What's your plan? Don't worry; you've got this. We have faith in you, at least.
Contact the author: patrick.george@insideevs.com
