WEBVTT - Stellantis CEO Carlos Tavares Talks EV Pricing, US Inventories 0:00:02.440 --> 0:00:06.840 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.040 --> 0:00:09.720 The last time we spoke, we've had some changes. The 0:00:09.760 --> 0:00:13.240 EU has voted to impose some tariffs on Chinese automobiles. 0:00:13.520 --> 0:00:15.680 What I want to understand from you is whether you've 0:00:15.720 --> 0:00:18.720 had some Chinese car companies knock on your door, dial 0:00:18.840 --> 0:00:21.360 your phone number and ask you to sell some of 0:00:21.400 --> 0:00:23.280 your brands to them. Is that happening. 0:00:26.920 --> 0:00:28.960 Well, first of all, thank you for inviting me. Yet 0:00:29.040 --> 0:00:32.200 that happened in the past. In the past, some Chinese 0:00:32.520 --> 0:00:35.440 car companies asked me to sell them some of our brands, 0:00:36.280 --> 0:00:41.320 which I believe is a significant asset of our stellants company, 0:00:41.360 --> 0:00:45.200 and therefore I rejected the request, and we are keeping 0:00:45.200 --> 0:00:48.160 our brands and of course doing good business with them. 0:00:48.520 --> 0:00:50.199 So the answer to that I gave them is no, 0:00:50.320 --> 0:00:51.120 thank you very much. 0:00:51.280 --> 0:00:53.880 Have they followed up on that request in the aftermath 0:00:53.880 --> 0:00:56.120 of that vote at the EU in the last few weeks. 0:00:58.760 --> 0:01:01.160 No, they didn't. No, they didn't. But it's obvious that 0:01:02.080 --> 0:01:05.679 with our Leap Motors investment and the equity that we 0:01:05.720 --> 0:01:08.840 have in Lip Motors, and most importantly the fact that 0:01:08.880 --> 0:01:12.600 we control all of their exports outside of China, it 0:01:12.680 --> 0:01:16.360 is quite clear that We have the manufacturing footprint not 0:01:16.400 --> 0:01:19.280 only in Europe but all over the world to bring 0:01:19.319 --> 0:01:23.200 to our partner and to ourselves the manufacturing sourcing that 0:01:23.240 --> 0:01:26.840 we need to go and do a good business out 0:01:26.880 --> 0:01:29.800 of the constraints that we need to manage. And of 0:01:29.840 --> 0:01:33.440 course tariffs are a constraint, and you can go around 0:01:33.520 --> 0:01:37.479 tariffs if you manufacturing inside of the bubble that has 0:01:37.520 --> 0:01:40.920 been built. This is what we are offering to Lip Motors. 0:01:41.400 --> 0:01:45.280 Everything that is sold outside of China is under our 0:01:45.319 --> 0:01:48.240 control through a fifty one forty nine JV called the 0:01:48.320 --> 0:01:51.320 Lipwotter's International and we are of course creating that value 0:01:51.720 --> 0:01:55.200 thanks to our dealer network system and our manufacturing system 0:01:55.200 --> 0:01:58.560 all over the world. This is a competitive edge of 0:01:58.680 --> 0:02:02.360 salentties that most of our competitors cannot reach. 0:02:02.440 --> 0:02:04.200 Right now, challus give us a little bit more to 0:02:04.200 --> 0:02:06.160 detail on how taris might impact the company. And I 0:02:06.200 --> 0:02:07.720 just want to say for the benefit of the audience, 0:02:07.840 --> 0:02:09.760 Lead Motor, of course, is a jav At joint invention 0:02:09.919 --> 0:02:12.520 you have with the Chinese manufacturers. Some of those cars 0:02:12.520 --> 0:02:14.720 are behind you as we speak. Callus, how are you 0:02:14.760 --> 0:02:17.320 thinking about retalentory measures coming from the Chinese? How well 0:02:17.360 --> 0:02:20.040 insulated you think you are from the potential of that developing. 0:02:23.320 --> 0:02:25.880 Well, First of all, what we see when we work 0:02:25.919 --> 0:02:29.160 with our partners from Lip Motors is exactly where their 0:02:29.200 --> 0:02:33.880 competitive edge is. Their competitive edge is very localized in 0:02:33.919 --> 0:02:36.760 a certain number of systems of the car, which is 0:02:36.800 --> 0:02:39.000 good to know because that's where we need to work 0:02:39.040 --> 0:02:42.800 harder to be more competitive compared to what we do today. 0:02:42.840 --> 0:02:45.440 So we see that. We also see that they have 0:02:45.639 --> 0:02:48.680 the ability to be much more affordable than the Western 0:02:48.680 --> 0:02:52.200 world and then meet the expectations of the consumer base 0:02:52.280 --> 0:02:54.160 that we have in the Western world, which is basically 0:02:54.520 --> 0:02:58.320 the consumers want to buy evs at the price of ices, 0:02:58.800 --> 0:03:01.200 and that's exactly what they are able to do today. 0:03:01.639 --> 0:03:03.400 We are also able to do that with some of 0:03:03.440 --> 0:03:06.480 our offerings in Europe, but we need to expand this 0:03:06.600 --> 0:03:09.640 competitive edge to many other brands and many of the models. 0:03:09.639 --> 0:03:12.640 So that is a competitive advantage that our company has, 0:03:12.919 --> 0:03:16.640 and by having this stability with them, we can leverage 0:03:16.639 --> 0:03:19.840 their cost competitiveness, their speed to go to market, and 0:03:19.880 --> 0:03:22.919 at the same time, if needed, to go around the 0:03:22.960 --> 0:03:25.640 custom duties that the Western world is trying to impose 0:03:25.639 --> 0:03:29.360 on us. That also means that compared to other Western 0:03:29.400 --> 0:03:32.200 World actors, we are in a much better position for 0:03:32.240 --> 0:03:33.839 the future than some of them. 0:03:34.040 --> 0:03:36.120 Carlos, can you just elaborate on that. Are you basically 0:03:36.200 --> 0:03:39.680 saying that the only way to really provide cost effective 0:03:39.880 --> 0:03:44.080 EVS to a European consumer is to get around some 0:03:44.240 --> 0:03:46.640 of the up to forty five percent tariffs that the 0:03:46.680 --> 0:03:47.720 EU just voted on. 0:03:51.400 --> 0:03:54.440 What I'm saying is that we are leveraging a strategy 0:03:54.520 --> 0:03:58.720 that is based on two major pillars. There is one 0:03:58.720 --> 0:04:03.200 pillar with lip Motors that brings EV technology at the 0:04:03.240 --> 0:04:07.760 price of ice despite the tarvists that you are mentioning, 0:04:07.800 --> 0:04:10.920 because we can go around the tarvis by manufacturing the 0:04:10.960 --> 0:04:14.360 cars inside of the bubble. That's one. On the other side, 0:04:14.560 --> 0:04:17.200 we have a dedicated platform that we call the smart 0:04:17.200 --> 0:04:21.560 car platform that we are using to bring compact cars 0:04:21.600 --> 0:04:24.480 to the market like new Citron C three that we 0:04:24.520 --> 0:04:28.400 bring to the market at twenty twenty three thousand euros, 0:04:28.760 --> 0:04:31.120 which is the core of the market in terms of 0:04:31.200 --> 0:04:36.760 PUREV and that price is extremely competitive. It's on par 0:04:37.000 --> 0:04:40.560 with the Chinese capability, and that kind of offering is 0:04:40.600 --> 0:04:43.039 also profitable for astilities. So not only we have the 0:04:43.080 --> 0:04:46.440 pillar of lip Motor, which is very strategic. We also 0:04:46.520 --> 0:04:49.719 have the internal pillar, which is the smart car platform 0:04:50.000 --> 0:04:52.640 that we are now using for example for the three 0:04:52.960 --> 0:04:56.520 Citro N hatchback, but also for the c Cross crossover version, 0:04:56.880 --> 0:04:59.839 and many other models will follow Fiat models, but also 0:05:00.320 --> 0:05:03.440 Opple models, and that is going to bring a lot 0:05:03.480 --> 0:05:05.760 of competitiveness to the market. So what I'm saying is 0:05:05.800 --> 0:05:10.880 that Sententtis is in a perfect condition to leverage affordability 0:05:11.279 --> 0:05:14.360 with profitability and zero emission in the near future. 0:05:14.560 --> 0:05:18.480 Carlos, how important is it in order to retain profitability 0:05:18.680 --> 0:05:22.120 and increase going forward? How important is it to pair 0:05:22.200 --> 0:05:25.040 back certain brands that aren't performing as well and that 0:05:25.160 --> 0:05:28.200 don't fit within those targets? And thinking in particular in 0:05:28.279 --> 0:05:29.120 North America. 0:05:33.240 --> 0:05:36.400 In North America, we have a very specific problem which 0:05:36.480 --> 0:05:40.080 is a very operational problem, not at all rocket science. 0:05:40.960 --> 0:05:44.280 In North America, we got trapped by a marketing plan 0:05:44.520 --> 0:05:48.680 on the second quarter of twenty four that was very audacious, 0:05:48.839 --> 0:05:51.640 very daring, and it didn't work. It failed. So we 0:05:51.680 --> 0:05:54.119 got trapped by that marketing plan and then we needed 0:05:54.200 --> 0:05:57.720 sometime to discuss the best way to rebound with our 0:05:57.839 --> 0:06:00.520 US dealers, which we did. I did it personally in 0:06:00.560 --> 0:06:03.400 August this year. Now we have a new, let's say, 0:06:03.440 --> 0:06:07.400 more conventional plan that is active and it's working very well. 0:06:07.800 --> 0:06:10.119 Over the last three months, we could reduce our US 0:06:10.160 --> 0:06:13.680 dealer inventory by fifty two thousand vehicles, and we will 0:06:13.680 --> 0:06:16.880 be before the end of this year, before Christmas below 0:06:17.600 --> 0:06:19.960 the ceiling of three hundred and thirty thousand vehicles, which 0:06:19.960 --> 0:06:23.719 we consider is the seiling for a normalized inventory. This 0:06:23.880 --> 0:06:27.200 problem is now being fixed. It's not rocket science. We 0:06:27.240 --> 0:06:29.479 have discussed it with our dealer body. I think we 0:06:29.560 --> 0:06:33.039 have the right dynamics right now and we expect this 0:06:33.160 --> 0:06:35.760 to be fixed this year. So that was what happened. 0:06:35.960 --> 0:06:39.239 Regarding the brands, the brands are very healthy, the rem brand, 0:06:39.279 --> 0:06:41.320 the Jeep brand, with all the new models that we 0:06:41.360 --> 0:06:44.039 are bringing, the Dodge brand, but also very soon the 0:06:44.080 --> 0:06:46.680 new Chrysler models. I think they are very healthy. We 0:06:46.839 --> 0:06:50.520 just need to do a proper operational work in terms 0:06:50.600 --> 0:06:53.839 of way to go to market and collaboration with our dealers. 0:06:53.880 --> 0:06:56.080 I think we have the capability to do that, and 0:06:56.160 --> 0:06:59.839 I believe that Ram and Jeep are already leading the 0:07:00.240 --> 0:07:03.080 in terms of the market share recovery that you can 0:07:03.120 --> 0:07:06.560 see as we improve our market share between September and 0:07:06.680 --> 0:07:09.320 July from seven point two to eight point zero percent. 0:07:09.760 --> 0:07:12.960 So market share is up, inventories are down. There will 0:07:12.960 --> 0:07:15.680 be normalized by Christmas, and I think we are back 0:07:15.760 --> 0:07:18.760 on a quite nice trend. But now we need to 0:07:18.800 --> 0:07:21.520 deliver the results. This is what our investors and the 0:07:21.520 --> 0:07:23.960 community of investors expect from Uskallos. 0:07:24.000 --> 0:07:25.600 Are you open to selling any brands? 0:07:29.680 --> 0:07:34.239 Not necessarily. I'm not necessarily open on that. Of course, 0:07:34.240 --> 0:07:38.200 we consider any offerings or any proposals, like in any 0:07:38.320 --> 0:07:41.520 open minded business team, as we consider we are, so 0:07:41.960 --> 0:07:44.640 if there are proposals, will study. But we are not 0:07:45.040 --> 0:07:48.800 seeking any sale of any of our brands right now. 0:07:49.040 --> 0:07:50.040 That's very clear. 0:07:49.960 --> 0:07:52.360 Because last time we spoke you talked about corrective action. 0:07:52.600 --> 0:07:54.480 You've got a mandate until I believe the end of 0:07:54.520 --> 0:07:57.360 twenty twenty six. As the CEO of this company, I 0:07:57.400 --> 0:07:59.200 shared some of the details the stats on the other 0:07:59.240 --> 0:08:03.000 capacity across the European or the manufacturing sector. You're familiar 0:08:03.000 --> 0:08:04.920 with them. They're worth repeating. Nearly a third of the 0:08:04.960 --> 0:08:07.320 major car plants from Europe's Big five are producing half 0:08:07.320 --> 0:08:10.440 the vehicles they have the capacity to make. And I'm saying, hey, Carlos, 0:08:10.480 --> 0:08:13.000 just wondering when are we going to make the decision, 0:08:13.040 --> 0:08:15.800 to make the corrective decisions that seemingly need to take place. 0:08:16.240 --> 0:08:18.840 One of two things needs to happen. Either Yuka capacity 0:08:19.360 --> 0:08:22.680 or European politicians. Governments are going to come out with 0:08:22.720 --> 0:08:26.120 the right kind of demand side incentives to buy the vehicles, 0:08:26.160 --> 0:08:28.600 because that's not there right now. When do we actually 0:08:28.600 --> 0:08:30.520 face the reality check? Is it this year? Is it 0:08:30.560 --> 0:08:32.600 next year? How much longer can we hold on with 0:08:32.720 --> 0:08:36.640 excess capacity? 0:08:37.080 --> 0:08:40.319 Your comment is very valid. It is quite clear that 0:08:41.400 --> 0:08:44.000 right now we only ask two things to the governments, 0:08:44.040 --> 0:08:47.800 and specifically the European governments. We ask stability of the rules. 0:08:48.880 --> 0:08:51.560 We do not ask for any kind of postponement because 0:08:51.600 --> 0:08:56.200 we are ethically committed to contribute to fixing the global warming, 0:08:56.920 --> 0:08:59.400 so we don't ask for any postponement. We ask for 0:08:59.520 --> 0:09:02.880 stability from one side, and from the other side, we 0:09:02.920 --> 0:09:06.080 ask the governments to stimulate the demand, which is not 0:09:06.120 --> 0:09:08.840 to help serentists, but to help the consumer so that 0:09:08.880 --> 0:09:12.520 the consumer can buy eves at an affordable price, i e. 0:09:12.640 --> 0:09:15.120 At the same price of IC. So that's what we 0:09:15.200 --> 0:09:17.880 are telling them. We'll see if they have the capability 0:09:17.920 --> 0:09:20.520 to do so, and If not, then we'll have to 0:09:20.559 --> 0:09:23.960 take decisions. As you say, I assume that those decisions 0:09:24.000 --> 0:09:26.120 will be made in the next few months. I think 0:09:26.160 --> 0:09:28.280 before the end of the year. If nothing happens, we'll 0:09:28.280 --> 0:09:30.680 have to make those decisions. That's absolutely clear. 0:09:30.760 --> 0:09:33.079 Becala's just to sit on that, because this is really important. 0:09:33.360 --> 0:09:36.760 Your message to the European government and government's national government 0:09:36.800 --> 0:09:39.439 across the continent. They've got two three months together and 0:09:39.520 --> 0:09:41.640 act together, otherwise you're going to have to close plants. 0:09:45.320 --> 0:09:48.840 We had a very good concrete example that you reported 0:09:48.880 --> 0:09:52.319 in the media about our dialogue with the UK government 0:09:52.360 --> 0:09:55.480 about the z F mandate. The ZF mandate in the 0:09:55.600 --> 0:10:00.960 UK had a threshold that was the double of the 0:10:01.320 --> 0:10:04.640 natural market demand. So if you need to put in 0:10:04.679 --> 0:10:08.040 the market the double of the market demand in terms 0:10:08.120 --> 0:10:11.079 of pure zero mission vehicles, of course it has a cost. 0:10:11.720 --> 0:10:13.280 It has a cost, and if there is a cost, 0:10:13.280 --> 0:10:16.040 and we need to compensate for that cost with additional 0:10:16.559 --> 0:10:20.800 decisions that will compensate for that cost. That dialogue has 0:10:20.880 --> 0:10:24.800 been ongoing for several months. We are now reaching a 0:10:24.840 --> 0:10:26.760 point where we have to make the decision, and again 0:10:27.080 --> 0:10:29.840 that will happen in the next few weeks. If the 0:10:29.880 --> 0:10:34.360 governments want us to sell a mix of BEVs that 0:10:34.559 --> 0:10:37.520 is above the natural demand of the market, they need 0:10:37.559 --> 0:10:41.000 to help to stimulate the demand so that we can 0:10:41.120 --> 0:10:45.400 reach that level of ZEV mandate without destroying the profitability 0:10:45.440 --> 0:10:48.000 of the companies. If that is the case, then we 0:10:48.080 --> 0:10:51.880 need to restore that profitability to ensure the sustainability of 0:10:51.920 --> 0:10:54.880 the company because we are trying to meet a ZEV 0:10:54.920 --> 0:10:59.040 mandate that is not what the market demand is. So 0:10:59.080 --> 0:11:02.800 that's the situation, which is I think a big opportunity for fustlities. 0:11:03.080 --> 0:11:06.520 Const Tananties is among the companies that has the highest 0:11:06.600 --> 0:11:09.320 number of BEVs on sale. By the end of this year, 0:11:09.400 --> 0:11:12.920 we'll have forty models on sale on the B segment 0:11:13.000 --> 0:11:17.679 only Hatchback and SUV we have sixteen models on this 0:11:18.200 --> 0:11:21.600 most important segment in European market. So we have the offering, 0:11:21.640 --> 0:11:24.280 we have the technology, we have the appealing products, we 0:11:24.320 --> 0:11:27.040 have the design, we have everything. We just need to 0:11:27.080 --> 0:11:30.480 stimulate the demand and help the middle class consumer to 0:11:30.800 --> 0:11:33.760 fix the affordability problem that we still have in our hands. 0:11:34.000 --> 0:11:35.679 Callis I've got to score? Is one extra question in 0:11:35.760 --> 0:11:39.600 I know you're busy. A European order manufacturer's investable right now, 0:11:39.640 --> 0:11:41.480 your stock is down by more than forty percent. What 0:11:41.559 --> 0:11:44.280 on earth do you tell investors as we're in between 0:11:44.320 --> 0:11:46.880 this horrible window right now where either you're going to 0:11:46.920 --> 0:11:48.880 have to do one thing or the government's going to 0:11:48.880 --> 0:11:51.000 have to do something else, but in between, it's so 0:11:51.120 --> 0:11:53.520 difficult for investor to make a decision to buy your stock. 0:11:53.880 --> 0:11:55.720 What's the message you give investors right now? 0:12:00.000 --> 0:12:04.160 Pactly understand why they are puzzled, and I'm sorry for that. 0:12:04.360 --> 0:12:06.880 It is quite clear that we are going to go 0:12:07.000 --> 0:12:10.000 back to them very soon to tell them that we 0:12:10.240 --> 0:12:15.360 fixed the US dealer inventory issue. This is the number 0:12:15.360 --> 0:12:17.960 one thing we need to fix. It's very operational, it's 0:12:17.960 --> 0:12:20.480 not rocket science, and I understand this is the number 0:12:20.520 --> 0:12:23.800 one priority. I think we are on the right trend. 0:12:24.240 --> 0:12:26.960 As we reduce the inventory by fifty two thousand vehicles 0:12:26.960 --> 0:12:29.920 in the last three months, the dynamics are good. We 0:12:30.000 --> 0:12:32.640 expect to reach a level that is below the ceiling 0:12:32.720 --> 0:12:34.960 of three hundred and thirty thousand by the end of 0:12:35.000 --> 0:12:38.679 this year. As soon as soon as this lending is 0:12:38.720 --> 0:12:41.520 in my hands, which I think it will very soon, 0:12:41.559 --> 0:12:43.440 I will go back to them to explain to them 0:12:43.440 --> 0:12:46.160 that that problem is fixed, and then I will leverage 0:12:46.240 --> 0:12:49.160 all the other competitive edges that we have on our company, 0:12:49.200 --> 0:12:51.880 which I believe are very big in terms of technology, 0:12:51.920 --> 0:12:53.960 in terms of bringing the right TVs with the right 0:12:54.000 --> 0:12:57.560 performance to the market, in terms of strategic partnerships like 0:12:57.600 --> 0:12:59.679 the one we have with it Motel. So they will 0:12:59.720 --> 0:13:02.280 see back very soon. But first I need to take 0:13:02.280 --> 0:13:05.280 care of my homeworks because that's my responsibility and I'm 0:13:05.360 --> 0:13:07.360 excited about fixing those issues.