Electric vehicles are finally turning a profit for Stellantis, CEO Carlos Tavares said Thursday, and, in contrast to some rivals, it will not cut back on producing EVs.
The announcement marks an important milestone for electric vehicles and for traditional automakers, which have struggled to make money on EVs even as demand has grown.
“Stellatis’ strategy is very different… from the other competitors from Detroit. We’re keeping full speed on electrification,” he told journalists after the company reported its third straight year of record profits since the merger of Fiat Chrysler and PSA Group created the company in 2021.
While non-union electric vehicle maker Tesla is the most profitable US automaker, it was losing money until 2019. At that point Tesla was making as few EVs as the legacy automakers, such as Stellantis, Ford and GM, are now manufacturing as they move towards a pure EV lineup.
Ford, the only company to break out results separately for electric and traditional vehicles, reported that it lost $4.7 billion in EVs last year, or more than $40,000 per vehicle. General Motors does not break out results for EVs, only saying that it remains on track to become profitable on those vehicles in the second half of this year. Both have pulled back on production plans for EVs in recent months.
Stellantis, which makes vehicles at its US plants under the Jeep, Ram, Chrysler and Dodge brands, has been selling EVs in Europe, but will introduce its first EVs to the US market this year.
Traveras said it’s possible the company’s string of record profits will eventually end as it shifts more to EVs from traditional internal combustion engines (ICE), although he said that “I’m quite confident that 2024 will be better than 2023,” when the company had to contend with a six-week strike at its US operations. But he said that EVs, while profitable, are still not as profitable as traditional gas-powered vehicles.
“We are working very, very hard to bring the profit margins of electrified vehicles to the same level as ICEs,” he said. “We are not there yet. But we are getting closer.
The company is moving ahead with plans to bring its first pure EV to the US market this year, although it already sells plug-in hybrid and other low emission vehicles in the states.
The company did see adjusted earnings fall 10% in the second half of the year, to 10.2 billion euros or nearly $11 billion. But it still posted a 1% increase in full-year earnings.
That prompted the company to announce a 3 billion euro, or $3.2 billion, share repurchase plan, which follows a $10 billion share repurchase plan announced at GM and a special dividend announced at Ford. Shares of Stellantis rose more than 5% in morning trading in New York and in Paris on the news.
Stellantis will spend more on the share repurchase than the 1.9 billion euros it will pay employees worldwide in profit sharing and other variable pay for the year. That includes profit sharing for about 38,000 United Auto Workers union members at an average of $13,860, down from $14,760 a year earlier. The UAW profit sharing payments are based on North American profits, which fell 5% for the year, mostly due to the strike, which cost the company less than $800 million.
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