Stellantis CEO Carlos Tavares defended the company’s decision to avoid price cuts during a presentation on its new electric vehicle platform.
The comments arrive shortly after a year of industry-wide price cooling, eliminating the seller’s market manufacturers enjoyed during the pandemic era and creating buyer-friendly conditions for the foreseeable future. However, Tavares expressed concern that cutting prices too quickly would put the company’s longevity at risk. “If you go and cut pricing disregarding the reality of your costs, you will have a bloodbath,” he remarked. “I am trying to avoid a race to the bottom.”
Tavares also expressed confidence in Stellantis’ ability to navigate fluctuating market conditions for a prolonged period of time. Although the automaker is facing multiple years of declining sales in the U.S., it does remain comparatively profitable. The company’s full-year financial results for 2023 have yet to be released, but in the first half, it recorded a net profit of roughly $11.9 billion, up 37% year-over-year. In the same timeframe, most manufacturers, including General Motors and Ford, struggled to boost their earnings even as their revenues reached all-time highs.
In an apparent reference to Tesla, Tavares offered a glimpse of what he believed would happen to Stellantis if it pursued price cuts in line with other automakers. “I know a company that has brutally cut pricing, and their profitability has brutally collapsed,” he commented. Since the start of 2023, Tesla has implemented frequent discounts across its lineup, with some vehicles losing more than 20% of their original value.
Although its sales and revenue accelerated throughout the year, investors and shareholders have expressed growing anxieties over the brand’s long-term sustainability. Some of those fears were evident in the first two weeks of 2024, during which Tesla lost nearly $100 billion from its market valuation, its biggest drop in roughly eight years.
