CES 2023: Stellantis preps cost cuts due to higher EV prices

Jan 5, 2023, 3:21 AM | Updated: 5:55 pm

Peugeot CEO Linda Jackson unveils the Peugeot Inception Concept car during the Stellantis keynote a...

Peugeot CEO Linda Jackson unveils the Peugeot Inception Concept car during the Stellantis keynote at the CES tech show Thursday, Jan. 5, 2023, in Las Vegas. (AP Photo/John Locher)

(AP Photo/John Locher)

DETROIT (AP) — Stellantis CEO Carlos Tavares says his company has to work on cutting costs globally in order to keep electric vehicles affordable for the middle class.

Among the cuts are reducing the number of the automaker’s factories because electric vehicles cost about 40% more than those powered by gasoline.

Without cost reductions, EVs will be too expensive for the middle class, shrinking the market and driving costs up more, Tavares told reporters Thursday at the CES gadget show in Las Vegas.

“If the size of the market shrinks, you are back to square one because you are reducing the efficiency and effectiveness of your manufacturing operation,” he said. “You go from hero to zero in three years if you stop working on costs.”

Stellantis began the factory reduction process in the U.S. last month when it announced plans to idle its plant in Belvidere, Illinois. In February, it plans to lay off about 1,350 people at the plant indefinitely. The plant about 70 miles (110 kilometers) northwest of Chicago now makes the Jeep Cherokee small SUV but has no new vehicle allocated to it.

Tavares said he’s not certain about costs going up or whether Belvidere will be closed, but said Stellantis must be prepared for a shrinking auto market globally.

“We’ll see how things move in the next few months,” he said, adding that a significant economic slowdown won’t help the Belvidere plant. But he said that if the economy comes back strongly, there’s no recession and consumers are still buying vehicles, “Then we’ll adapt our decisions.”

He said worries about electric vehicle affordability extend to Italy, France, Spain, Greece and other European counties “which means we need to accelerate the cost reduction on that technology to make it more affordable.”

Stellantis, he said, has seen its production costs rise, especially raw materials and because of the shortage of computer chips. It has to cut fixed, variable and distribution costs to offset those, plus the increased cost of EVs. Otherwise vehicles will be too expensive or profit margins will drop, Tavares said.

“Are we sure that we will not need the (factory) capacity? No, we are not sure,” he said. “If you keep for a signification amount of time capacity that you don’t use, you put yourself in trouble. That’s what experience shows. So you need to continually adjust your capacity to your needs.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Image: Ambulances are seen at the airport where a London-Singapore flight that encountered severe t...

Associated Press

World news roundup: Man dies after turbulence; Iran funerals; Israel media law

A Singapore Airlines flight hit severe turbulence over the Indian Ocean and descended 6,000 feet in a span of about three minutes.

1 day ago

Image: Bruce Nordstrom, left, and Jeannie Nordstrom attend the Nordstrom NYC Flagship Opening Party...

Associated Press

Bruce Nordstrom, who helped grow family-led department store chain, dies at 90

Bruce Nordstrom, a retail executive who helped expand his family's Pacific Northwest chain into an upscale national brand, has died.

2 days ago

Image:Israeli Prime Minister Benjamin Netanyahu attends the weekly cabinet meeting at the prime min...

Associated Press

World news roundup: Netanyahu arrest warrant; Assange can appeal; UK blood scandal

The International Criminal Court said it is seeking arrest warrants for Israeli and Hamas leaders, including Benjamin Netanyahu.

2 days ago

Image: In this photo released by the Iranian Presidency Office, President Ebrahim Raisi attends a m...

Associated Press

Iran president and others found dead at helicopter crash site, state media says

Iran President Ebrahim Raisi, the country’s foreign minister and others have been found dead at the site of a helicopter crash Monday.

3 days ago

Photo: Shawna Williams, owner of Free Range Cycles, poses outside her shop on May 6, 2024, in Seatt...

Mae Anderson, The Associated Press

Bike shops boomed early in the pandemic. It’s been a bumpy ride for most ever since

For the nation's bicycle shops, the past few years have probably felt like the business version of the Tour de France, with numerous twists and turns testing their endurance.

3 days ago

Image: A person wears a T-shirt with the names of Kristin Smith, Charity Lynn Perry, Joanna Speaks,...

Associated Press

Man probed in deaths of women in northwest Oregon indicted in 3 killings

A man who has been under investigation in the deaths of four women whose bodies were found across northwest Oregon has been indicted.

4 days ago

CES 2023: Stellantis preps cost cuts due to higher EV prices