Carlos Tavares Says Electrification is Being Advanced by Politicians, Not the Industry

Stellantis CEO Carlos Tavares stated some plain and refreshing truth this week about the automotive industry’s move to electrification. “What is clear is that electrification is a technology chosen by politicians, not the industry,” he told the press.

Despite Stellantis making formal announcements that it will be investing 30 billion euros ($34 billion USD) into its electrification strategy, Tavares made it sound as if the company’s plan was crafted under duress. He has been telling European media that the widespread adoption of EVs is primarily being pushed by politicians who are ignoring the environmental risks and logistical shortcomings.

Europe has suggested banning the sale of new internal combustion vehicles by 2035. Canada has a similar strategy, creating a “mandatory target” that would require all new light-duty vehicles sold to be zero-emissions by 2035.

Tavares’ candid move to say that movement for quick EV adoption is is politically driven comes from a few considerations that he outlined:

The organized push for implementing such mandates, he said, was exacerbating supply chain problems by creating an industry-wide shakeup. As politics are often fluid and there aren’t really guarantees, he worried that it would result in the collapse of automotive jobs and product lineups that are not aligned with consumer needs or the realities of the market.

Stressing the finances of the situation, he said that if EVs remain priced well above their internal-combustion counterparts, they’ll never achieve mass appeal. He also noted that it’s the same situation for manufacturers investing heavily into electrification and competing for natural resources, linking it to earlier promises he made not to shut down factories located in Europe. “I generally hold on to the promises I make, but we also need to remain competitive,” he said, citing in particular production costs in Italy which were “significantly higher, sometimes the double of those at plants in other European countries,” mainly due to “exorbitant” energy prices.

Then there’s the matter of how green the green movement really is. The organized push for mandating emissions-free driving (at least in terms of what comes out a vehicle’s tailpipe, but not factoring-in the resources consumed in manufacturing the vehicle) is undoubtedly growing and automakers are complying in advance. What seems to get glossed over are battery production costs — everything from child labour issues to the increased demand for their materials with fossil fuels playing a good part in their extraction and delivery to factories. And on top of that, the risks associated with battery waste disposal.

“Given the current European energy mix, an electric car needs to drive 70,000 kilometers (43,496 miles) to compensate for the carbon footprint of manufacturing the battery alone and to start catching up with a light hybrid vehicle, which costs half as much as an EV,” Tavares told reporters.

All this is rare to hear it coming from an automotive executive that just promised to spend several billion dollars developing EVs.

One reason for Tavares being vocal now is that FCA has only been able to comply with European requirements for CO2 emissions because it had purchased carbon credits from Tesla for several billion euros. Those are set to expire this year, making it so the company will have to comply with the region’s stringent regulations or pay the EU sizable fines.

Another could be that he is surprised by how quickly the other automotive manufacturers appear to be transitioning to having EVs on the market.

The industry overall should be concerned about how much leverage the swap to EVs would give China. It dominates the production of components necessary for batteries. As of 2019, China was responsible for over 60 percent of the world’s cathode materials going into electric cars, 83 percent of anodes, and held a 73 percent market share of all cell manufacturing. Considering how poorly having semiconductor chip production localized in Asia has worked out for Western automakers, it’s not unthinkable a similar situation could play out with batteries. Stellantis is feeling the pinch with chip shortages for its vehicle manufacturing at present with the problem set to plague the company for another year if not more.

Tavares is largely correct in asserting that government involvement is fundamentally changing the industry without giving much consideration as to what could go wrong.