‘Affordable EVs for Europe can come from India’: Stellantis CEO Carlos Tavares
With EVs, it is not a “technology problem” but more of “an affordability problem,” says Carlos Tavares, the global CEO of Stellantis, the world’s fifth largest automaker. The company plans to address that challenge for Europe by exporting cars (EVs) from India, which it considers as amongst the best-cost bases in the world.
Speaking to a select set of Indian media on Wednesday evening, Tavares said: “Thus far, Europe is unable to make affordable EVs. Hence, there is a big opportunity for India to be able to sell EV compact cars at an affordable price, protecting the profitability. Because the country has such a cost- competitive supplier base, it is possible.”
First visit to India after becoming Stellantis boss
In his first visit to the country after taking charge of Stellantis, Tavares spent over 48 hours reviewing the Indian operation and gauging the cost and quality of its first compact car from Citroen – the C3 – which rolls out of its Thiruvallur plant on the outskirts of Chennai.
He said the conventional IC-engine hatchback in Europe at present costs between 15,000 to 20,000 euros (Rs 12.66 lakh to Rs 17 lakh) and EVs are available at an almost 40-50% premium at 30,000 euros (Rs 25 lakh).
If EVs are bought by a few wealthy people, then the volumes will be limited and it will have a marginal impact on the environment, he pointed out. “How to make EVs affordable to the middle class is the biggest challenge – only affordability can create scale and only then can one have a significant impact on the environment,” he opined. Exporting from places like India could be an alternative Stellantis is exploring.
January 2023 launch for electric Citroen C3 in India
Citroen, which launched the petrol version of the C3 in July this year for the Indian market, is planning to launch the electric version of the compact car in January of 2023.
Tavares said, “Because we are able to deliver a worldwide benchmark in quality at a very cost- competitive price, it may be possible. This is not decided yet, but this is what we are trying to do in 2023. Those are the doors that can open for India.”
The export potential is going to depend on how fast Stellantis India is going to achieve its cost and quality targets. The shipping of vehicles to South East Asia is almost a given, even as exports to Europe are on the radar.
While Tavares did not give a definite timeline for exports, Autocar Professional learns that Stellantis has outlined a plan to produce close to 25,000 e-C3s in 2023, of which a sizeable volume is meant for export markets with Europe likely to be amongst the key contenders.
Open to buying EV parts from strategic sourcing hub – India
A big fan of Indian frugality and cost competitiveness, Tavares said the country already is a critical base for exports of engineering R&D and engines and gearboxes. Stellantis’ Indian arm annually exports over 300,000 gearboxes to the global operation.
Stellantis, which has invested over a billion euros (Rs 8,446 crore) in its Indian operations since 2015, operates three manufacturing plants (Ranjangaon, Hosur, Thiruvallur), an ICT Hub (Hyderabad) & Software Centre (Bengaluru), and two R&D centres in Chennai and Pune. The Digital Hub in India has grown into one of the largest in-house ICT and digital organisations within Stellantis.
Tavares said the company has a sharp focus on localisation and it will look at localising battery cells and parts even in India and may use it for exports.
According to Tavares, the company makes its own motors, battery packs, software and ACC cells. This effectively means Stellantis has a deep integration on EVs globally, which is something that it can attempt even in India to ensure right cost and affordability for EVs.
“We would love to buy all electrified components in India, from an Indian supplier. Right now, it is not possible to localise more than 90% of components. We need to find the suppliers and we are very open to that discussion. I would love to buy a battery from an Indian supplier. I am still looking for it. We have not found a source yet, it will happen in the next few years,” he asserted.
Reviewing the Indian business and on the modest start of Citroen brand journey in the country, Tavares said, “We are not chasing volumes; we are doing the right thing in the right way. If we do the right thing, the volume will be the reward. At Stellantis, we do not push the metal, we consider pushing the metal – one kind of value destruction.”
As to whether Citroen could we have started stronger in the Indian marker, Tavares quipped: “Perhaps. But we are not taking any risk on the ramp up.”
To be sure, announcing the India entry in 2019, Tavares had at the time forecast that Citroen will be looking to sell 100,000 cars annually in India by 2025.
The company, however, will be using India as a key development and sourcing hub for the C-Cube Smart Car platform. The emerging compact car platform is designed to spawn three midsize vehicles. While the C3 hatchback is the first model, Citroen will be launching a B-SUV called CC24 by mid-2023; another compact model is lined up for a 2024 launch.
Tavares claims Stellantis has 30% better cost structure than some of its rivals and it is not in the game of “pushing metal” as it believes that it is “value destructive”. “We are a healthy company, we can take the time. We are not in disarray; our financials are stellar. We are investing enormously in all our brands,” he added.
Tavares informed that with its frugal approach, the Indian operation is already making money. This holds the company in a good stead in today’s business environment, which is witnessing a global slowdown.
“On a global basis, Europe is under recession, the US is going into recession, and India is not at risk. Stellantis has one specific differentiator – our breakeven point is below 40% of our revenues. We work so hard on the cost to protect the pricing power of the company. If something externally happens, the net revenue can go down by 60% and we can still be in the black,” said Tavares, signing out on a very pragmatic note.