Fiat parent Stellantis has concluded it can't currently make affordable electric vehicles (EVs) in Europe and is looking at lower-cost manufacturing in markets such as India, its chief executive told reporters.
If India, with its low-cost supplier base, is able to meet the company's quality and cost targets by the end of 2023, it could open the door to exporting EVs to other markets, said Carlos Tavares, CEO of the group whose brands also include Peugeot and Chrysler.
"So far, Europe is unable to make affordable EVs. So the big opportunity for India would be to be able to sell EV compact cars at an affordable price, protecting profitability," Tavares told reporters at a media roundtable in India late on Wednesday.
Stellantis is investing heavily in EVs and plans to produce dozens in the coming decade, but Tavares warned last month that affordable battery EVs were between five and six years away.
On his first visit to India since taking over as Stellantis CEO, he said the company was still working out a plan regarding EV exports from the country and had not yet taken any decisions.
Tavares' possible bet on India comes after American carmakers Ford and General Motors have exited the world's fourth-largest car market, after failing to make money and break the dominance of Japan's Suzuki Motor and South Korea's Hyundai Motor.
It also comes as Chinese EV makers are making inroads into Europe, aiming to win over buyers with more affordable cars having already stolen a march on most foreign rivals in China, the world's biggest market for EVs.
Stellantis is the latest to refocus its strategy in China where it now plans to be a niche player through its Jeep and Maserati brands, after it said its Jeep joint venture in the country would file for bankruptcy.
"There is a growing tension between China and the Western world. That is going to have a consequence in terms of business. The power that is best placed to leverage this opportunity is obviously India," Tavares said.
India, where Stellantis sells its Jeep and Citroen brands, accounts for a fraction of the carmaker's global sales, but Tavares said the company was not chasing volume and instead wanted to ramp up slowly and profitably.
Tavares has previously said he expects revenues in the South Asian nation to more than double by 2030 and operating profit margins to be in double-digits within the next couple of years.
The carmaker plans to launch its first EV in India — an electric model of its Citroen C3 compact car — early next year.
Stellantis already makes its own electric motors and battery packs, and also has plans to make battery cells. In India, too, Tavares wants to locally procure EV components, including batteries so it can be competitive on cost and price.
"The customs duties to import a car in India are sky high. Which means if you want to have an affordable EV, it has to be made in India with Indian suppliers and components," he said, adding the company would need to source at least 90 percent of parts locally to be competitive.
"EV today is mostly an affordability problem," he said. "It's not about technology."
© Thomson Reuters 2022
Affiliate links may be automatically generated - see our ethics statement for details.