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Tavares’ Call to Arms: Battling Chinese EV Dominance

Chinese EVs are currently limited in the American market due to protectionist measures, but there are concerns that Chinese carmakers may use factories in Mexico to avoid tariffs.
Stellantis CEO Carlos Tavares
source:Stellantis /Carlos Tavares, CEO
  • Automakers are transitioning to electric vehicles, with Chinese EV affordability causing disruption in global markets.
  • Stellantis CEO Carlos Tavares highlights the importance of superior offerings and innovation to stay competitive in the industry.
  • The automotive sector is experiencing intense competition, emphasizing the need for differentiation among companies.

Carlos Tavares, CEO of Stellantis, boasts a stellar career spanning Renault to PSA Group, where he excelled in strategic leadership and global expansion. His vision and operational prowess drive Stellantis forward, making him a respected figure in the automotive industry.

  • Traditional cars generally cost less than electric vehicles, which poses a problem for automakers transitioning to EVs.
  • In China, EVs are more affordable than gas-powered cars, and Chinese EVs are being exported and sold at competitive prices globally.
  • The emergence of Chinese automakers in the global market is a concern for automakers outside of China, including Stellantis.
  • BYD, backed by Warren Buffett’s Berkshire Hathaway, is a major Chinese carmaker that has surpassed Tesla in global EV sales and is known for its low prices.
  • Chinese EVs are currently limited in the American market due to protectionist measures, but there are concerns that Chinese carmakers may use factories in Mexico to avoid tariffs.
  • Stellantis aims to launch 18 new EVs this year, with a focus on matching the prices of traditional cars.
  • In Europe, Stellantis is introducing the electric Citroen e-C3 to compete with budget models from Chinese rivals like Great Wall Motor. The e-C3 is priced at 23,000 euros ($25,100) and will be available in the second quarter.

Stellantis CEO Carlos Tavares emphasized the challenge facing automakers as they transition to electric vehicles. He pointed out that traditional cars are generally more affordable, especially outside of China.

However, in China, EVs are priced more competitively than gas-powered vehicles, leading to a surge in Chinese EV exports worldwide. Tavares expressed concern over this trend, likening China’s automotive emergence to past instances of Japanese and South Korean carmakers disrupting global markets.

Highlighting the threat posed by Chinese automakers, Tavares stressed the importance of providing consumers with superior offerings compared to Chinese EVs. He underscored the competitive landscape in the automotive industry and emphasized the critical role of innovation and differentiation in staying ahead in the market.

Q: What did Tavares note about the profitability of both models, and what cautionary statement did he make regarding pricing strategies?

A: Tavares noted that both models would be sold at a profit. However, he warned against the dangers of engaging in a damaging price war, emphasizing the consequences of cutting prices without considering actual costs. He expressed concern about the potential for a “bloodbath” in profitability and stated his intention to avoid a “race to the bottom.”

Q: What action did Tesla take in response to market conditions, and what concerns did CEO Elon Musk express during an investor call?

A: Tesla reduced prices for its Model Y in Europe and for both its Model Y and Model 3 in China. However, during an investor call, CEO Elon Musk warned of “notably lower” sales growth for the year following a disappointing fourth quarter. He stated that Tesla is “between two major growth waves” and disclosed plans to produce an entry-level EV priced at $25,000 next year to better compete against Chinese rivals and cheaper gas-powered cars.

Q: What specific concern did Elon Musk express regarding Chinese carmakers, and what potential impact does he anticipate?

A: Elon Musk expressed wariness about Chinese carmakers like BYD, warning investors that without trade barriers, they could potentially dominate the global market. He emphasized their exceptional capabilities and suggested that without intervention, they could “demolish most other car companies in the world.”

Tackling Price Wars and Emerging Competition: Ford CEO’s Cautionary Note and Tesla’s Strategic Shifts

  1. Tavares, the CEO of Ford, warns against engaging in a damaging price war and emphasizes the importance of considering costs when setting prices.
  2. Tavares does not specify which company he is referring to, but his comments come after Tesla reduced prices on its Model Y in Europe and both the Model Y and Model 3 in China.
  3. Tesla, in a call with investors, predicts lower sales growth this year and plans to produce a more affordable electric vehicle (EV) starting at $25,000 to compete with Chinese rivals and cheaper gas-powered cars.
  4. Elon Musk, the CEO of Tesla, expresses concern about Chinese carmakers like BYD and believes they could dominate the global car market if there are no trade barriers in place.

Merger and Mastery: Carlos Tavares as Stellantis CEO, here’s a point-wise biography of Stellantis CEO Carlos Tavares:

Early Life and Education:

  • Born on August 14, 1958, in Portugal.
  • Earned a degree in Mechanical Engineering from the École Centrale de Paris in France.

Career at Renault:

  • Joined Renault in 1981.
  • Held various leadership positions within the company.
  • Played a key role in Renault’s expansion into emerging markets and development of its electric vehicle strategy.

CEO of PSA Group:

  • Appointed as the CEO of PSA Group in 2014.
  • Led significant restructuring efforts and achieved remarkable financial performance.
  • Oversaw the global expansion and transition towards electrification of PSA Group’s brands, including Peugeot, Citroën, and Opel.

Merger and CEO of Stellantis:

  • In 2021, became the CEO of Stellantis following the merger of PSA Group and Fiat Chrysler Automobiles (FCA).
  • Leads one of the largest automotive companies globally, overseeing a diverse portfolio of iconic brands such as Jeep, Dodge, Ram, Fiat, and Maserati.

Leadership Style and Reputation:

  • Known for his strategic vision, operational expertise, and hands-on leadership style.
  • Respected for navigating complex challenges and driving innovation in the automotive industry.
  • Positioned companies for long-term success amidst a rapidly changing automotive landscape.

Recognition and Influence:

  • Widely respected within the industry for his accomplishments and leadership abilities.
  • Considered a significant figure in the automotive sector due to his contributions and influence in shaping the industry’s future.

Here’s a summary of Carlos Tavares’ background and achievements:

Chief Executive Officer and Executive DirectorStellantisJanuary 2021 – Present
Chairman of the PSA Managing BoardPSAMarch 2014 – January 2021
Chief Operating OfficerRenault2011 – 2013
Executive Vice President, Chairman of Management Committee Americas, President of Nissan North AmericaNissan2009 – 2011
Various positionsRenault1981 – 2009
Co-chair of the Freedom of Mobility Forum’s Advisory BoardFreedom of Mobility ForumCurrent
Member of the European Automobile Manufacturers’ Association (ACEA) Board of DirectorsACEAPrior to December 2022
President of the European Automobile Manufacturers’ Association (ACEA)ACEA2018 – 2019
Board memberAirbus S.E.2016 – 2022
Board memberTotalEnergies2017 – 2020
EducationGraduate of École Centrale ParisN/A

Binder is an experienced writer around the EV industry. Aiming to bridge the EV knowledge gap.