Everything Stellantis Is Doing Wrong According To Stellantis CEO Carlos Tavares

I’m pumped to be writing TMD this Wednesday for a number of reasons. First, our President’s Day sale was a hit and we’ve added more members than we have in a long time. I’m pretty busy this morning and haven’t updated the code, so if you’re still looking for Cloth Annual at just $4 a month the code might still be active. Just saying. Second, we’ve got Stellantis CEO Carlos Tavares talking about Carlos Tavares, China, and North America. All the things. It’s great.

Ford is lowering the price of its Mustang Mach-E electric car, bringing it a little closer to Model Y territory for people who do not want a Tesla. It sounds like Toyota is going to start paying its suppliers more to improve working conditions at supplier plants, which is well-timed since Subaru’s plants are shut down due to the unfortunate death of a worker. Ford just avoided a strike in Kentucky over worker issues.

And speaking of workers, Tesla is facing more pressure in Sweden.

Carlos Tavares: I Gotta Long List Of Regrets

Carlos Tavares, pictured here talking to Reuters reporter David Shepardson, did a media tour in New York yesterday and there are all sorts of juicy quotes and information.

Tavares sounds fairly candid in these interviews. Below is an interview with CNBC and Tavares. On “Squawk Box” he talked about what is needed to make EVs work: A charging network, a long range, and affordability. What’s the issue?

“That’s the major star that is not aligned with the other ones” he told Phil LeBeau.

Preaching to the choir!

What else do we have? On China, Tavares says he doesn’t need help or want tariffs because his company is global and has to compete with Chinese automakers everywhere else so why even bother? From The Detroit News:

“My only option is to go head-on and that’s what we are doing,” he said, pointing to the Citroën ë-C3, a small hatchback produced in Slovakia for Europe from one of Stellantis’ French brands. The model starts at about $21,600 (19,990 euro).

Stellantis will seek to achieve a $25,000 vehicle in the U.S. market, though Tavares didn’t provide a timeline for that. It’s been made more challenging because Americans prefer larger vehicles that would require a larger battery pack, the most expensive part of an EV, for desirable ranges. He said there will have to be changes in supply chains, including using more suppliers in low-cost countries. The United States isn’t a low-cost country.

Also, Stellantis is pretty invested in China. I am curious to see how the new electric Fiat 500 does here as that’s not a huge-range vehicle and does have a smaller battery pack.

Also from The Detroit News, what about all that merger talk?

“Right now, we are just focused on execution. We have enough on our plate. There are no discussions on consolidation right now. … I want to cut all speculation on that stuff.”

I mean, if you ask nicely maybe I’ll stop.

My favorite report on the Tavares media tour is from The Detroit Free Press; the piece is just Tavares listing stuff he thinks should be better in North America, which has seen sliding sales as the company’s lineup ages:

Tavares said one area he looks to improve is in market communications.

“We are trying to move money from low-return activities to high-return activities,” Tavares sad. “So we are not cutting the total amounts, we are just saying, some media or marketing events are lower return than others.”

Ok, so marketing. This is at least partially about the skipping of auto shows.

What else?

“The production planning can be better than what we did,” he said. “The quality of the relationship with our dealers could be better and we’re working on that, and we are bringing in new product to the U.S. market so that’s a lot of things that should be aligned to make a better performance in the U.S.”

Ok, so figuring out the vehicles to build, the marketing of those vehicles, and the relationship with dealers (which I’ve also heard). Anything else?

Tavares listed the new 4½-year contract it reached with the United Auto Workers last fall as a challenge and he said the company is focused on improving its costs and to be more competitive, especially with EVs.

Ok, so choosing which cars to build, the actual building of those cars, the marketing of those cars, and the selling of those cars, as well as the EV transition. Carlos, isn’t that everything? The good news for Tavares and Stellantis is that the company is making a better than 15% margin in the United States and raking in record profits. Plus, a bunch of new products are finally coming to product-starved dealers.

Mach-E Drops Price Below $40k For Entry-Level Model

Last year we wrote about how Ford dropped the price of its entry-level Mach-E to $47,295; it’s been a year and, after another round of price cuts, the Standard Mach-E now comes in under $40k.

Per CNBC:

The No. 2 U.S. automaker’s lowest-price 2023 model year Mach E version now has a suggested retail price of $39,895, down from $42,995. The higher-end Mach-E GT spec will cost about $7,600 less, at $52,395. Other versions including the extended-range premium version will drop in price by $8,100 to $48,895.

Ford said the price cuts come as the automaker continues “to adapt to the market to achieve the optimal mix of sales growth and customer value.”

So, this is nice, the Mach-E is now cheaper than a Model Y. Unfortunately, the Mach-E doesn’t qualify for a $7,500 tax break and the Tesla Model Y does. Until that’s fixed it’ll make the Mach-E a competitive proposition, but not a Tesla Model Y killer given the charging network (which Ford is addressing with the NACS change) and slight range penalty (about 10 miles shorter than the base Model Y).

Ford does have a couple of tricks up its sleeves according to The Detroit Free Press:

In addition, Ford Credit is offering 0% financing for 72 months to qualified buyers, plus a $7,500 cash incentive on leased vehicles that is applied to immediately to lower the lease payment, Ford spokesman Marty Gunsberg said.

Honestly, that’s not bad. If I were to get a new electric vehicle now I’d probably lease rather than buy because of better incentives and the reality that in three years there will be a lot more choice for buyers.

Toyota-Subaru Deals With More Worker Issues, Ford Gets Some Resolution

Toyota is fully in get-yer-shit-together mode as it deals with the weight of becoming the world’s largest carmaker.

Let’s start with Subaru, which is now part of the larger Toyota Motor Group with Toyota as its largest shareholder. Tragically, a 60-year-old worker at a Subaru plant in Japan was crushed to death by a mold, as Automotive News reports:

The accident happened on the evening of Feb. 13, after a 25-ton mold fell on a worker at the Yajima assembly plant in Gunma prefecture north of Tokyo, local media reported.

A police spokesman in Ota, the city where the Yajima factory is located, confirmed details of the death. Police identified the worker as a 60-year-old man who was a 35-year veteran of Subaru.

The man was operating a crane by himself using a remote control to lift and move 25-ton molds, the local Jomo Shimbun reported.

The terrible incident has resulted in the shutdown of three Subaru plants, responsible for making a lot of the company’s vehicles.

At the same time, Toyota is going to use its record profits to pay back suppliers so those suppliers pass those dollars back to workers:

The world’s largest auto manufacturer said it will pay higher prices to encourage better labor conditions at some 400 suppliers in Japan starting in the fiscal year that begins April 1.

The hikes will partly help suppliers hire more workers to help better shoulder the workload. They will also help suppliers afford improvements to the work environment at their factories.

Toyota sent letters of notification to suppliers in Japan on Feb. 9, the head of the carmaker’s supply chain strategy department said in a Monday briefing. Overseas suppliers also may receive payment increases at a later time.

Ford finally has a final contract with the UAW at its key Louisville, Kentucky truck plant, narrowly averting a new round of strikes according to the Courier-Journal:

On Feb. 16, the UAW served Ford with a strike notice over local contract issues at KTP, namely health, safety and skilled trades jobs.

Evan Palmer, a UAW representative and interim bargaining rep from UAW Local 862 in Louisville who participated in the local contract negotiations said, the main hurdles during negotiations focused on getting a minimum in-plant nurse staffing level, ergonomic issues, and “language to improve the culture in skilled trades.”

“This will be the best local agreement the membership has ever seen,” Palmer said.

Year of the hybrid and, maybe, a little hangover from 2023, which was the year of the worker.

Tesla May Face More Worker Action In Sweden

The ongoing resistance by Tesla to accept the worker’s union in Sweden has resulted in a lot of little annoyances (no mail, no trash cleanup) but it hasn’t, thus far, stopped Tesla from having the best-selling EV in Sweden.

Sweden’s unions aren’t giving up, according to Reuters:

Swedish trade union Seko said on Wednesday members may stop installing and servicing Tesla’s (TSLA.O), charging stations in the country in support of union IF Metall’s conflict with the U.S. carmaker over collective agreements.

Tesla is facing pressure in the Nordic countries from powerful employee unions backing Swedish IF Metall’s mechanics who went on strike in October last year demanding a collective agreement with the company.

Will this work? Who knows. Probably not.

What I’m Listening To While Writing TMD

Clive, my E39, is getting inspected while I write this in a coffee shop so I need chill coffee shop music. The Shins and their album “Chutes Too Narrow” it is.

The Big Question

How cheap would a Mach-E need to be to buy over a Tesla Model Y if you were in-market?