Last week, Stellantis CEO Tavares told investors he wants to cut costs by 30% and plans to send in European managers to “clean up the mess” at plants.
His comments, reported by Local 4 in Detroit, were during an annual investor meeting. Tavares promised a massive cost-cutting effort to reduce costs for an “EV first strategy.” This will make the company better able to compete globally with Chinese automakers.
Local 4 speculates job losses could be considerable especially those in the Auburn Hills office tower. This tower houses much of the engineering, marketing, and leadership teams from the old Chrysler group.
These jobs could be replaced with employees from places like Turkey and Morocco.
The Auburn Hills building is a fixture in Detroit and former CEO Lee Iacocca said he built it with the profits made from the minivan.
Stellantis CEO’s focus on plants
Stellantis CEO Tavares also is focusing on the assembly plants.
“We have at least two plants that need a significant turnaround, at least two,” said Tavares, according to Local 4.
He said he plans to send European plant managers in to “clean up the mess.”
During a CNBC interview with Phil Lebau, Tavares said he thinks the middle class wants EVs, but only if the price is similar to a gas vehicle.
In that same interview, he acknowledged that 2024 will be very “unbalanced” for Stellantis as it transitions to offering more EVs. Those new EVs will include a Wagoneer S, Dodge Charger and Jeep Recon all planned to debut in the second-half of the year.
Then, there is the inventory issue with Ram leading the industry with 153 days of supply on lots according to the latest Cox Automotive new-vehicle inventory study. Most brands want 50-60 days of supply.
“There are plenty of opportunities for consumers … and we are going to manage that on a progressive manner,” Tavares said.
This will likely mean incentives, special financing and lease deals will be coming.
He also said, “we know the middle class wants to buy EVs at the same price of ICE vehicles.”
This is why he wants to cut costs and bring the prices of EVs down anyway possible.
The bottom line
These major cuts will send shockwaves throughout the industry as it transforms into building more electric vehicles to meet global emission standards and, in some cases, internal company climate change goals.
It is going to get ugly before it gets better for employees at these companies going through this transition.
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