The former CEO of Stellantis, Carlos Tavares, explained his vision on the sidelines of the Paris Motor Show. Firstly, that we cannot remain halfway between electric and thermal, because this would kill the manufacturers. This is an old point of his, not without foundation, to which Stellantis responded by attempting to accentuate the modularity and partial fungibility of the platforms.

It was good while it lasted

Holding investments in both worlds in parallel risks sinking profitability, in fact. So, what to do? So far, Tavares has pushed for public money to compensate for the extra costs borne by builders. Perhaps the request came to him because, as we know, we live in a global war on subsidies, but this type of request is coming to clash with the evident constraints of public budgets, not only in the EU.

John Elkann explains why Tavares left Stellantis

Then, Stellantis has a huge problem: the United States. A problem of accumulation of inventories and a sharp drop in demand, with a modernization of the product line and pricing policies which, after having rewarded the Stellantis share, which seemed to have found the philosopher’s stone of profitability, ended up in the manufacturer’s face and his arrogance. In reality, it was just a matter of maximizing short-term margins, one of those things that often turn out to be the antithesis of value generation. And indeed. The numbers are relentless in describing the American disaster: between 2019 and 2024, with inflation growing by 23 percent, Stellantis price lists increased by 50 percent. What followed was the weakening of demand, the resistance to reviewing price lists downwards and dealer yards full of unsold cars.

Therefore, in the coming months, strong discounts are needed to dispose of stocks, and production blocks. Once this costly emergency is over, Stellantis will have to understand if four brands (Jeep, Ram, Dodge, Chrysler) are too many and how to achieve design, marketing and platform synergies. But it will only be the preview of a similar process, which will take place in Europe.

The survival of Stellantis

Now, we need to face reality: the survival of Stellantis, in its current configuration, will be played out in the coming months and years on the attempt to straighten out the American situation. There there is survival or its opposite. Perhaps, when it comes out of the tunnel, Stellantis will be much smaller and with many fewer brands. A market like the Italian one, with all due respect, is an appendage of the empire, one of those which in the end it turns out can be removed laparoscopically.

And after all, Tavares knows how to do math:

If the Chinese take 10 percent of the market shares in Europe at the end of their offensive, this means that they will account for 1.5 million cars. This represents seven assembly factories. European manufacturers will then have to either close down or transfer them to the Chinese.

The Volkswagen syndrome

Therefore the antics of a large part of the Italian political class, who summoned Tavares to rant against him, are of no use, nor the usual phrases about “Fiat took billions from Italy and now look at those ungrateful people”. I know it will be shocking for some, but we are not talking about Fiat here but about another world. Therefore, the “dossiers” on the aid given in the past decades in Turin are long overdue. And don’t fool yourself: even those who are public shareholders of Stellantis are not doing well. Perhaps he will only be able to delay the cleaver, but that is not at all certain.

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Rather, we can only note that, in recent decades, a completely dysfunctional country system has done nothing to create the conditions for not having all its eggs in one basket. There is therefore little use to the pranks of ministers pro tempore, who on even days threaten to let the Chinese in (better if on a full moon night, so that everyone can see), ignoring that they would be subtractive and not additive on the workforce, and in the odd ones they are pleased because the message to the incumbent has arrived loud and clear, now they will get busy and production will increase. Mr. Bonaventura’s million vehicles, basically.

The Stellantis affair crosses two dimensions of politics: on the one hand the strong myopia, which leads to living the frenetic daily life made up of local elections that will prepare the way for the New Era, as well as television appearances and interviews with the signaling value of nothing and everything the epochal events that will happen in the following weeks. I don’t know, appointments in Rai or in public subsidiaries. On the other hand, the essential necessity to cover one’s ass in the face of the inevitable show assertiveness and dictate the conditions to pilot the future, in the name of the sovereign people.

The meteorite

This population, however, is buying fewer and fewer cars: for demographic reasons but also due to changes in lifestyle that affect those who live in urban areas more or less served by alternative collective or individual means of transport. This weighs as much or more than electrification. The final blow comes with the manufacturers’ pricing policy, to protect margins by moving up the range or in any case thinking that Covid subsidies were the new drug to be injected to make demand poorly elastic to the price. If we add to all this the fact of having only one egg in the basket, the circle closes. Although some might argue that more builders would have amplified the damage, if highly correlated in the fate of the Great Transition and malignant demography. The intersection of these two dimensions produces, guess what? Nothingness. Or rather, the wait for a meteorite phoned like few others. Demography, the country system, technological evolution are things completely outside the reach of politics. Of the politics of this time and place. Which is not just the Italian one.

What happens now

After that, Tavares will also be able to say that he trusted the local American management, but was wrong. He will also be able to dress up in the most transparent of fig leaves, saying that the path is not only that of cuts and closures but also, for example, “that of research and development” (sitcom laughter in the background). But I fear that the trajectory is set. But not all evil has a silver lining: do you want to put the number of episodes of political television talk shows spent execrated and proposing miraculous solutions, from the Chinese to the patrimonial, to keep the Italian car alive?

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