The boss of the Stellantis group (Peugeot, Citroën, Fiat, Jeep, etc.), Carlos Tavares, spoke about the price of his electric cars. If, according to him, it is important to reduce the latter, we must not go too far, at the risk of causing margins to fall. But above all, the arrival in Europe of Chinese Leapmotor cars thanks to Stellantis could well change the situation for the price of electric cars.
Competition is increasingly tough in the automobile market, and particularly in the electric car market. And for good reason, many new Chinese manufacturers are arriving in this segment and are particularly trying their luck in Europe. Which pleases neither Brussels nor the already well-established traditional brands.
Falling prices…
It is in this context that companies have been engaging in recent months a fierce price war, started in particular with Tesla. The firm had dropped the prices of its Model 3 and Model Y by 13,000 euros at the very beginning of the year, prompting its rivals to react. Since then, manufacturers have continued to push prices down, while specialists believe that parity with thermal models will soon be achieved.
This drop in prices is also made possible by the fall in the cost of lithium, which continues to decline over the months. This is how manufacturers can offer ever cheaper cars, like the Stellantis group. The latter, fruit of the merger between PSA and FCA continues to drive down the prices of its electric cars, without cutting into its margins.
This is in fact what his boss Carlos Tavares explained during the 15th edition of the Goldman Sachs Industrials & Auto Week which takes place in Amsterdam. Relayed by the site Automotive Newsthe businessman indicates that the group’s electric cars are now almost as cost-effective as thermal models. But this requires a balance that is not easy to maintain.
And for good reason, the company must offer affordable cars, in order to stay in the race against its rivals. This is how Citroën recently lifted the veil on its ë-C3, which will start below 25,000 euros in its cheapest version. But other models should also see the light of day, while Stellantis recently joined forces with the manufacturer Leapmotor.
…but not too much either
For the record, the European firm now owns no less than 20% of the Chinese company, which notably markets the T03 that we recently tested. At the same time, the group wants to continue its offensive in the United States with its Ram and Jeep brands. By 2030, the company plans to market no less than 75 electric cars around the worldincluding 25 across the Atlantic.
But if Stellantis must drive prices down in order to remain competitive, it must remain vigilant not to go too far. Because this could have a direct impact on margins, which risk falling too much, which would inevitably cause the company to lose money. Fortunately, the latter already has a pretty smart cost reduction strategy to avoid losses.
This takes the form of a “ supply that is 30% more competitive than any alternative that can be implemented in the Western world » thanks to the partnership with Leapmotor. Before adding that Stellantis “ will import its Chinese cars into European markets profitably“. We also imagine that the strategy is quite similar for its ë-C3 which will be sold for less than 20,000 euros in 2025.
Which allows him to reduce costs without cutting into margins, which is vital. The manager explains that “ those who fail to make money with electric vehicles will face difficulties very quickly”.
Indeed, he recalls that thermal cars are more profitable than electric, which requires very heavy investments. But there is no choice, since combustion cars will be banned for sale in Europe from 2035, while we will have to deal with tough competition, including Renault with its R5 E-Tech.