Weekly Brief: Stellantis Soars as Others Ditch Mobility Opportunities

Commentary By Andrew Tolve

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9th May 2022

When Fiat Chrysler Automobiles merged with French automaker PSA in January 2021, pundits wondered if the result would be another dysfunctional three-headed conglomerate like Renault-Nissan-Mitsubishi.

Instead, the newly named Stellantis has performed impressively over the past year and its stock has soared on Wall Street thanks to some eye-popping figures, like posting record results in its first year with 11.8% adjusted operating margin and $14.1Bn net profit.

Last week the good news kept on coming. Stellantis reported first quarter 2022 net revenues of $43.6Bn, up 12% compared to $38.9Bn for Q1 2021. This was despite the fact that its total consolidated shipments of 1.4 million units was down 12% owing to the impact of unfilled semiconductor orders. The company is now the fourth largest carmaker in the world and benefits from its global footprint. Its products include popular models on most of the major continents, like the Jeep Grand Cherokee in North America, the iconic Fiat 500 in Europe, the Citroën C4 in the Middle East and Africa and the Jeep Compass and Peugeot 208 in South America.

Stellantis’s chief executive officer, Carlos Tavares, is famous for turning around the money pit that was Opel prior to his reign starting in 2017. Now he’s brought the same relentless focus on cost cutting and achieving new efficiencies to the helm of Stellantis. He’s also made some big bets on electric vehicles. The carmaker has committed $35.5Bn in the next four years with the intention of taking Chrysler all electric by 2028 and achieving carbon net zero across the company by 2038.

Last week that plan came into clearer focus. Stellantis is preparing to retool and modernize two of its Ontario factories, Windsor and Brampton, so that they can become powerhouse EV producers. The company will spend $2.8Bn in the push, with the Canadian and Ontario governments pitching in about $800M to support the cause. “We’re building a world-class Canadian auto industry, an innovative economy and a clean, strong future for everyone,” said Canadian Prime Minister Justin Trudeau. “This is what a healthy environment and a healthy economy looks like.”

Stellantis will also build Canada’s first large-scale battery plant in Windsor in partnership with LG and the Canadian government. The plant, which is estimated at $4.1Bn, will open in 2024 and help Stellantis scale its EV initiatives across the North American market. The carmaker says it’s already reaping the rewards of its EV push in Europe, where BEV sales are up more than 50% year-over-year.

Mobility services is another one of CEO Tavares’s big bets. Last week Stellantis’s carsharing division Free2move signed an agreement to acquire car-sharing company ShareNow, a joint venture formed by Mercedes-Benz Mobility Group and BMW Group in 2019. Details of the deal were not disclosed but I have to imagine that Mercedes and BMW are pleased with the terms. Carsharing is the business model carmakers can’t get away from fast enough. General Motors has bailed on Maven. Audi has waved goodbye to SilverCar. Nissan said sayonara to Switch. The list goes on.

Tavares thinks he knows something the others don’t. Free2move abandons the traditional car ownership model, relieving Stellantis of the burden of maintaining a vast fleet that quickly depreciates. Instead, Free2move facilitates connections between users and rental car companies, enabling quick, easy, hyper short-term car-sharing scenarios. Stellantis believes that the acquisition of ShareNow will position Free2move as the leading global mobility player, more than doubling its size and adding 14 major European cities to its service.