Jeep maker splits with economists, seeing inflation clearly

Stellantis NV Chief Executive Officer Carlos Tavares warned the auto giant is feeling the strain from rising raw material prices and expects semiconductor shortages to stretch into next year.

Stellantis is the latest major European manufacturer to raise concerns about rising raw material costs and shortages of key components. (Reuters)
Stellantis is the latest major European manufacturer to raise concerns about rising raw material costs and shortages of key components.

“I see the inflationary pressure very clearly," he said on a webinar organized by the Detroit-based Automotive Press Association. “I see inflation coming from many different areas."

There’s a “disconnect" between the view among some economists that price increases aren’t structural and what Tavares said he’s seeing in the day-to-day operations of the company. Transaction prices are rising and tight supply of semiconductors and other components is leading to disruptions and cost increases, he said.

Stellantis is the latest major European manufacturer to raise concerns about rising raw material costs and shortages of key components. Mercedes-Benz maker Daimler AG and Dutch paint producer Akzo Nobel NV also touched on the themes earlier Wednesday.

The alarm bells aren’t spooking stock investors. Stellantis shares rose 4% in Paris, Daimler advanced 1.1% in Frankfurt and Akzo Nobel finished up 0.7% in Amsterdam.

Stellantis, is doing its best to protect the Ram truck brand and key new model launches from the effects of the chip shortage, Tavares said. The company isn’t seeing enough signs that additional production in Asia is making its way to other parts of the world in the near future, so it’s taking steps to diversify sourcing.

Other topics covered during the wide-ranging conversation included:

  • Talks are ongoing for a battery plant in the U.S., while another slated for North America could be located in Canada.
  • Stellantis is preparing a 10-year strategy plan for release by early 2022.
  • The company has inked a deal to fix issues related to its car manufacturing in China and will reveal details after the summer. By year-end, Tavares said he’ll outline a full strategy including an “innovative" new business model.
  • Stellantis has now validated technology from a solid-state battery partner that it will invest in. Tavares declined to identify the company.

The automaker also is in discussions with two companies to secure supplies of lithium for EV batteries. It views the element as one that won’t be replaced -- unlike cobalt, for instance.

First Published Date: 22 Jul 2021, 18:48 PM IST
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