May 24, 2022

For Tavares, the switch to all-electric will have “major social consequences”

Carlos Tavares has not changed his mind: since the vote last July to ban the sale of cars with thermal engines by 2035, he has been firing red balls at this decision of the European Commission.

Yesterday, the managing director of the Stellantis group resulting from the merger of PSA and FCA, continued his pounding, lambasting in a new warning the strategy of the European Union which wants to decarbonize the automotive industry at a forced march, betting everything on the 100% electric vehicle.

The attack is multi-faceted: in an interview conducted in Paris and published Tuesday evening around 6 p.m. simultaneously by four European dailies, he argues in all directions on European policy, deploying both the economic, industrial, political, environmental and social with the aggravation of the social divide.

This is not the first time that Carlos Tavares has come out on this issue. On December 1, 2021, he unfolded his criticisms at the new Reuters Next summit organized on December 1, 2021, during a video conference with a global dimension:

“What has been decided is to impose electrification on the automotive industry which adds 50% additional costs to a conventional vehicle. It is impossible for us to pass on 50% additional costs to the end consumer, because the most of the middle class will not be able to pay”, had then launched the boss of Stellantis.

|Read: End of the thermal car in 2035: the block war intensifies in Europe, France takes the lead in the “no”

An environmental risk

“Not looking at the entire life cycle of electric cars is obviously very restrictive”, the leader told reporters from the four daily newspapers The echoes (France), Handelsblatt (Germany), Corriere della Sera (Italy) and El Mundo (Spain).

“With the European energy mix, an electric vehicle must drive 70,000 km to compensate for the bad carbon footprint of battery manufacturing and start to widen the gap with a light hybrid vehicle”, he assures.

Additional cost and social risk

“We also know that a mild hybrid vehicle costs half as much as an electric vehicle”, observe M. Tavares.

“We must not lose sight either that we risk (…) losing the middle classes who will no longer be able to buy a car and that there will be social consequences.”

Between subsidies and widening deficits, a risky political choice

For Carlos Tavares, who pleads for the maintenance of hybrid vehicles, the choice to disadvantage this type of vehicle is a political choice of the European Union which could have serious consequences: “What is clear is that electrification is the technology chosen by politicians, not by industry”, he says.

“All in all, is it better to agree to run high-performance thermal hybrid cars so that they remain affordable and bring an immediate carbon benefit, or do we need 100% electric vehicles that the middle classes will not be able to afford, while asking the States to continue to widen the budget deficit to subsidize them?

He adds:

It is a social debate that I would dream of having, but for the moment I do not see it.” (…) “It is therefore too early to say whether the European approach is reasonable”, concludes- he with a tinge of irony.

Industrial challenge and risk of social damage

For manufacturers, this is “to limit the 50% additional cost of electricity as much as possible, in five years”, with significant productivity gains.

“We will see in a few years the builders who will have survived and the others”, predicts the boss of Stellantis.

It completes the social picture by evoking the fate of the other stakeholders, those of the suppliers and subcontractors, essential:

“We are not the only ones (to be involved), we have a whole ecosystem of subcontractors around us. They’re going to have to move as fast as we do.”

In fact, what Carlos Tavares criticizes in the first place is the timing, “brutal”, too short to allow a smooth transition:

“It is the brutality of change that creates social risk”, emphasizes Carlos Tavares.

Car “without a gradual transition, the social consequences will be major”, he fears.

Competitiveness VS decarbonization VS unemployment… the case of Opel

In fact, Carlos Tavares also responded to journalists on issues that are a priori more national, but which shed light on the group’s global industrial policy in the current context.

Thus the problem of Opel in Germany, raised by the journalist of the German daily Handelsblatt. He questioned Carlos Tavares on the group’s policy vis-à-vis its subsidiary, after the violent political and union protests which forced Stellantis to postpone its plan to sell the Rüsselsheim and Eisenach factories to Opel. Despite this setback, Tavares, notes the Handelsblatt, remains adamant on his line:

“Our goal is to make our German sites more autonomous,” he replied from the outset, because his concern is that “the managers on site can find solutions to improve competitiveness and secure jobs”.

He says he doesn’t understand the resistance in Germany because Tavares sees himself and Stellantis as the saviors of the historic German brand which, when run by General Motors, racked up billions in losses:

“A lot of what we have done at Opel since 2017 has been criticized. But what does not bother anyone is that Opel is now making money. »

After letting this feeling of ingratitude break through, he accuses:

“Our approach has been distorted for political purposes.”

|Read: Carlos Tavares: “Opel must unleash its creativity and bring diversity to the PSA group”

Huge productivity gains to avoid cutting staff

More generally, Carlos Tavares already explained at the beginning of December why the question of productivity is central for the manufacturer.

The boss of Stellantis explained during Reuters Next, December 1, 2021, that in order to be able to maintain its workforce, the manufacturer was working to improve its productivity at a rate much faster than the industry standard.

“Over the next five years, we have to digest 10% productivity per year […] in an industry accustomed to delivering [des gains de] 2 to 3% productivity », had quantified Carlos Tavares, quoted by The New Factory.

In the interview given yesterday, he confirmed his state of mind:

“Closing means putting a padlock on the door and sending everyone home. We didn’t do that. And if I can avoid it, I will avoid it,” said Carlos Tavares

He added:

“I usually keep my promises, but we also have to remain competitive. The future of our sites will also depend on the political constraints on decarbonisation in Europe and its consequences on the automotive market.”

Layoffs: negotiations resume amid declining sales

To see, to follow. Because, if the negotiations with the unions on the workforce will resume on February 1, they look bad. And the unions, not only in Sochaux, but throughout the automotive industry say they are worried.

Indeed, no one missed it: new car sales did not rebound in 2021, they did worse than in 2020, and even their lowest score since 1990, when the index was created. registrations.

Because the automotive industry is weighed down on the one hand by repeated blockages in its supply chains, which have been permanently disrupted by the semiconductor crisis, but it still has to face the very heavy transformation of its model based on heat engines and fossil fuels to that of so-called carbon neutrality, based on the electric car.

However, the manufacture of an electric motor requires “3.5 times less time” than for a heat engine and “six to seven times fewer parts”, according to professionals interviewed by Capital magazine last October.

|Read: 2021 EU new car sales worse than 2020, lowest figure on record