Tavares Says Electric Vehicles Cost 40% More To Manufacture

Automakers Can't Pass The Costs Onto Consumers...

Robert S. Miller March 23, 2023

Dodge Charger Daytona SRT Banshee Concept. (Dodge).

The CEO of Stellantis, Carlos Tavares, has expressed some skepticism regarding the electrification hype currently being promoted by politicians around the world. While not dismissing the importance of electric vehicles (EVs) outright, Tavares has raised concerns about the practicalities of mass-producing them and the economic implications of doing so.

Stellantis CEO Carlos Travares. (Stellantis).

One of the primary issues with EVs is their production cost. Currently, the cost of producing an EV is around 40% higher than that of producing an internal combustion engine (ICE) vehicle. This poses a problem for automakers, as they cannot simply pass these costs onto consumers without risking the loss of half their customer base. Tavares suggests that subsidies may be necessary to keep pricing “artificially affordable” for consumers. However, this model may not be sustainable in the long term, and the government tax breaks and subsidies were initially intended to stimulate early adoption rather than prop up the entire industry.

2024 Jeep® Recon Moab (EJ) 4xe Battery-Electric Vehicle. (Jeep).

In addition to the cost issues, Tavares has also highlighted the need for more efficient, lightweight EVs with longer ranges to achieve carbon neutrality. The sourcing of raw materials for EV production is not particularly eco-friendly, and the industry has underestimated just how much materials would be required. Furthermore, Tavares acknowledges the finite nature of necessary raw materials and the need for recycling batteries. To extend the supply of necessary battery materials, Tavares suggests the implementation of hybrid vehicles, which would allow for more efficient use of engines and less dependence on expensive rare earth metals.

Chrysler Airflow Graphite Concept. (Chrysler).

Tavares is not alone in his views. Executives at Toyota share their concerns and also advocate for the use of hybrid vehicles. The real challenge, however, is getting politicians to recognize the practicalities of mass-producing EVs and to provide support for the wider industry rather than simply stimulating early adoption. Ultimately, the transition to an all-electric future must be balanced with practical considerations, economic realities, and sustainability concerns.

Source: Muscle Cars and Trucks

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TripleT Mar 23, 2023 #1

Some of that will improve with scale, especially in battery manufacturing, the logistics alone right now are insane.

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Deckard Cain Mar 24, 2023 #2

Considering that Tesla has insane profit margins and their models are price competitive within the respective segment with ICE vehicles they have shown that it's possible to make EVs profitably and competitively with ICEs.
Tavares is just crying and moaning because Stellantis (mainly the euro side) was caught with their pants down and started this path much later than they should've. Now they're caught between Tesla's price cuts on one side and on MG's and BYD's hyper-competitive EVs on the other. Thus, Stellantis cannot now overcharge for subpar EVs with small battery packs like the e208, Avenger or the upcoming e308 and Astra-e.

TripleT Mar 24, 2023 #3

Telsa makes everything at a single sight. Most of the current OEM are shipping components long distances in expendable dunnage.

This will change soon, Kokomo is at full speed, GM and Fords battery plants are all under construction. They always think of logistics last, you cannot do this with these Class 3 hazardous goods. It massively is adding to cost of manufacturing what should be simpler process.

Reply 3 Likes

cygnus Mar 24, 2023 #4

Agreed. There are no STLA 'passion Product' EVs in the same manner as the existing STLA ICE vehicles. STLA cannot get away with their same shenanigans with an EV Jeep portfolio that they did with the ICE Jeep portfolio. I'm only talking about the US, I could care less what STLA Europe does, but the underlying assumption I describe loosely holds true. There is no existing Customer loyalty (a group they've abused with higher prices) attached to Jeep EVs. Those Customers will simply go to the OEM that will build ICE vehicles. I'm not talking about going to an overpriced Bronco either. You're going to have people going to the 2024 Tacoma and 2025 4Runner, body on frame vehicles with mild-hybrids at competitive prices. The GM mid-size pickups are stupid expensive, almost the same as an overpriced Wrangler.

It's all happening on the JLWranglerForums, if these stupid executives would read it. People are migrating away from Jeep, it's already started.

Everything I predicted about the downfall of US CDJR will eventually happen if this management group remains in place. 2022 was the top of the market, in terms of vehicles sold/profits - vehicle volumes were (and still are) less than pre-Covid, but results/profits were goosed due to limited vehicle supply because of Covid/supply chain issues. That's not the case anymore - vehicle deliveries are falling (due to higher interest rates), dealer lots are packed with unsold vehicles, and ASPs are (finally) going to start coming down if they have any hope of moving metal. Its all downhill from here.

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A AlexB Mar 24, 2023 #5

Agreed. There are no STLA 'passion Product' EVs in the same manner as the existing STLA ICE vehicles. STLA cannot get away with their same shenanigans with an EV Jeep portfolio that they did with the ICE Jeep portfolio. I'm only talking about the US, I could care less what STLA Europe does, but the underlying assumption I describe loosely holds true. There is no existing Customer loyalty (a group they've abused with higher prices) attached to Jeep EVs. Those Customers will simply go to the OEM that will build ICE vehicles. I'm not talking about going to an overpriced Bronco either. You're going to have people going to the 2024 Tacoma and 2025 4Runner, body on frame vehicles with mild-hybrids at competitive prices. The GM mid-size pickups are stupid expensive, almost the same as an overpriced Wrangler.

It's all happening on the JLWranglerForums, if these stupid executives would read it. People are migrating away from Jeep, it's already started.

Everything I predicted about the downfall of US CDJR will eventually happen if this management group remains in place. 2022 was the top of the market, in terms of vehicles sold/profits - vehicle volumes were (and still are) less than pre-Covid, but results/profits were goosed due to limited vehicle supply because of Covid/supply chain issues. That's not the case anymore - vehicle deliveries are falling (due to higher interest rates), dealer lots are packed with unsold vehicles, and ASPs are (finally) going to start coming down if they have any hope of moving metal. Its all downhill from here.

“Wrangler overpriced” is complete nonsense (in 2018 it was nonsense, and 2023 still nonsense) .
1:Lower priced JK Models had lower take rates, while models with higher trim levels with options sold better.
2: The company believe that historically the Wrangler was underpriced , decisions to take actions to correct the underpricing was made back in 2015.
3:2015 decision was made Wrangler needed more Options/Trims/Packages

4Runner is a very different vehicle than Wrangler and if the 4Runner is a Wrangler competitor then so is the Tahoe.

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