As the automotive industry transitions to more sustainable transportation options, Stellantis CEO Carlos Tavares has been clear about the impact the high cost of electrification could have on the company’s operations and how it will need to adapt moving forward.
At 40 percent greater cost than conventional technology, passing the additional cost of electrification on to consumers not only puts EV affordability at risk for middle-class buyers, but puts greater emphasis on operating the plants efficiently, Tavares has warned.
“If we pass that cost to the consumer, then we lose half of the customer base,” Tavares said during recent meetings with reporters. “We cannot sell at a loss because, if we sell at a loss, then we put our company in jeopardy and then we have to restructure.”
Moving forward, Stellantis is adapting to this new reality and finding ways to absorb the additional cost.
One way the company is protecting affordability is by transforming the footprint of the business in all areas. Total Production Cost (TPC) is a key metric to reduce costs in the manufacturing process wherever possible. TPC includes transformation cost, inbound freight, tool depreciation, and the purchase of primary materials and components.
Employees can help lower TPC by looking for opportunities to improve efficiency in their work area, sharing ideas to reduce cost or materials, being at work as scheduled and helping prevent line stops so the plant makes its build each shift.
Tavares noted that the focus must remain on optimizing the way the company manufactures vehicles everywhere in the world.
“If we don’t fix the affordability, this will not make sense for the planet because if we only sell EVs to the wealthy, the impact on the planet is going to be marginal,” Tavares said. “For the impact on the planet to be very positive, we need volume. That means we need to have affordability so that the middle classes can buy these vehicles. To do that, we need to accept to change.”