It is in the best interest of the fledgling Stellantis to manage all of its automobile assets as a single business.
Chief financial officer Richard Palmer told analysts this week that Stellantis had no plans to separate its electric car business from its internal combustion engine division. In a call to report Stellantis first-quarter sales and shipments, the issue was asked. Due to recent actions from its crosstown rivals Ford and General Motors, the decision was taken.
Competitors Versus Stellantis
For the first time, Ford stated in March that it was separating its electric car operations from those of its traditional internal combustion engine-powered automobiles. Traditional operations are now known as Ford Blue, while the EV firm has been renamed Ford Model e. They’ll run their own firms, but they’ll pool their technology and other resources to maximize their mutual gain. By 2023, they’ll have their own set of financial results to publish. Both are still a part of Ford, and neither is a separate entity.
While GM allocated engineering resources to electric vehicles and internal combustion engines (ICE) in 2019, the company did not create separate business segments despite investor demand. Even though GM CEO Mary Barra has consistently stated that electric cars (EVs) are the company’s future and are now receiving a higher proportion of capital spending, GM’s electric future still relies on revenue from traditional automobiles.
Rivian and Lucid, two newcomers to the electric vehicle market, are attempting to tap into investor enthusiasm for EV startups that began with Tesla and have since spread to other newcomers. When a company’s electric vehicle program is separated from the typical automobile industry, it hopes to attract more investment and value from investors by portraying it as a high-potential, exciting new enterprise.
Experimenting With a Merger
Given that Stellantis is still striving to smooth out operations and determine its course as a new company, the automaker is leaving everything intact. Stellantis was created in January 2020 by uniting Fiat Chrysler Automobiles and the PSA Group. In total, it manages 14 brands, all of which are working on future product strategies under a framework called Dare Forward 2030, which includes ambitious electric vehicle (EV) goals. By 2030, Stellantis has promised to sell 5 million all-electric vehicles in Europe, and EVs would account for 50% of sales in North America.
There aren’t many advantages to separating electric vehicle and internal combustion engine operations, according to CFO Richard Palmer. “During this time of transition, I believe we must keep an eye on the company and its assets. There are advantages to using the cash flow created by internal combustion engines to fund the technical investments that we must undertake “Palmer was quoted as saying. In other words, Stellantis needs the money from its traditional product base to transition to an all-electric future and believes that a single business entity is the most economical way to do this.
But that doesn’t mean that Stellantis won’t change. “We’re obviously looking at a lot of new business sectors and how to be faster and more nimble in how we operate those businesses,” the CFO says. “We are open to new techniques to drive speed and adjust behavior when appropriate, but we are not anticipating any huge changes in structure,” says Stellantis. Executives at Stellantis believe the best way to capture the synergies offered by merging two companies is to manage all of the company’s assets as a whole in these early days.
Driving Revenue with Jeeps
In contrast to other carmakers, Palmer says that Stellantis is optimistic that its savings and efficiency will offset the rising costs of raw materials in the automotive industry.
A 15% drop in the Jeep Grand Wagoneer and 2022 Jeep Wagoneer market share in North America contributed to boost Stellantis’ market share to 11.7 percent in a market that was overall down 15 percent this quarter. The first quarter of 2022 brought in $44 billion in revenue, an increase of 12 percent despite the overall decline in vehicle sales of 12 percent due to continuous semiconductor chip shortages. Revenue and shipments are published quarterly, however only half- and full-year earnings are recorded.