Carlos Tavares, CEO of Stellantis, warned on Thursday at CES 2023 that more car factories might close if high electric vehicle (EV) prices drive consumers out of the market and sales drop to pre-pandemic levels. He further noted that, as chip supplies recover, automakers could potentially lose their pricing power.
This is not the first time Tavares opened up about his concerns regarding the consequences of rising material costs. His statements echo reports suggesting that a lack of affordability, rising costs, and high inflation threaten the EV market.
According to a Bloomberg New Energy Finance (BNEF) analysis, the price of EV batteries increased significantly in 2022 due to growing raw material and battery component costs. The report found that the volume-weighted average price for lithium-ion battery packs rose by 7% to $151/kWh this year.
In a survey released by the consulting company Deloitte last week, American consumers want to purchase an electric vehicle but are concerned about price increases.
According to the findings, “nearly 7 in 10 prospective EV buyers in the United States expect to pay less than $50,000 for their next vehicle.”
Stellantis announced last month that it would permanently shut down its assembly plant in Belvidere, Illinois, due to high EV costs.
“If the market shrinks we don’t need so many plants,” Tavares said. “Some unpopular decisions will have to be made.”
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