Carlos Tavares said Tesla is facing a reality check after its margins declined significantly over the past year.
With Tesla’s profitability on the decline following numerous price cuts since late last year, Stellantis CEO Carlos Tavares believes the US EV maker is now entering the real world of manufacturing and competition.
Tavares made some interesting comments in front of the press as he presented first-half results for the Franco-Italo-American carmaker.
“They are entering my world, the world of tight pricing, cost competitiveness, and the operational issues that a big company like ours may face,” Tavares said, according to Reuters.
The executive highlighted the fact that Tesla’s profitability moved from more than 17 percent in the first half of 2022 to 10.5 percent in the first half of 2023, which is a big decline however you look at it. The fall continued in the second quarter, reaching 9.6 percent.
“They were more profitable than Stellantis, now they are less profitable than Stellantis,” the executive remarked. Tavares said Stellantis’ margins are also better than that of General Motors, which he estimated at 8.3 percent. He also noted that Stellantis has no plan to lower prices on his vehicles, looking to squeeze production costs instead.
He warned the auto industry that all carmakers, including Tesla, would have to face increasing competition from Chinese EV makers in their home markets.
Gallery: 2024 Jeep Recon
“What has been said by the Tesla CEO (Elon Musk), whom I respect totally, is that they prefer growth to profitability. And we’ll see to which extent they will be also challenged by the Chinese,” Tavares said.
He added that Stellantis is better prepared than Tesla to deal with Chinese EV makers because it has higher profit margins.
“If we are racing for the bottom in terms of facing the Chinese with price cuts, Tesla will have problems with that strategy before we do, because we are more profitable than Tesla,” the executive noted.
Stellantis, the world’s third-largest carmaker by sales, posted its first-half results on July 26, announcing a rise in its revenue, operating profit, and net profit. The company also posted a 24-percent increase in global EV sales even though its North American EV offensive is yet to begin.
Stellantis has yet to launch a battery-electric vehicle in the region, despite the fact it sells dozens of BEVs in Europe. The automaker’s first EVs will launch in North America later this year, including the Ram ProMaster electric van and the new Fiat 500e.
The EV offensive will continue next year with eight new models, including the Dodge Charger Daytona electric muscle car, Jeep Wagoneer S and Recon SUVs, and Ram 1500 REV pickup truck.
Source: Reuters
Comment!
Keyword: Tesla Entering "World Of Tight Pricing," Cost Woes: Stellantis CEO