Stellantis stock 'is very cheap' ahead of 8 EV launches, CEO says
Stock in the maker of Jeep SUVs and Ram pickup trucks "is very cheap," its CEO said on Wednesday as Stellantis NV prepares to launch eight new battery-electric vehicles over the next 18 months.
Stellantis shares on the New York Stock Exchange closed at $20.36, up 0.34%. Shares closed up roughly 4% earlier in both Milan at $20.90 (18.43 euro) and Paris at $20.87 (18.40 euro).
Investors are looking for evidence the merger of Fiat Chrysler Automobiles NV and French automaker Groupe PSA — a union not even one year old — can deliver on electrification and software commitments. Stellantis CEO Carlos Tavares emphasized during a virtual conversation with Morgan Stanley and from a stage at the CES technology trade show in Las Vegas that the automaker is executing with 33 plug-in hybrid and electric vehicles on sale worldwide today and 50 more coming to market within the next five years.
"The first part in terms of electrification and zero emission mobility, it's a competitive game," Tavares said. "My role as the CEO of this company is to make sure that our customers will benefit from the most competitive — meaning safe, clean and affordable — mobility solutions of the industry. That's the competitive part of it, and I feel very comfortable. Because as you know, I am a competitor."
The launches include a new all-electric lineup for the struggling Chrysler brand by 2028. Chrysler is showing its electric Airflow concept crossover this week at CES. The company also announced Amazon will be the first commercial customer of the all-electric Ram ProMaster van when it launches in 2023. The automaker is investing $35.5 billion into electrification and software by 2025.
But Stellantis' share price hasn't seen the growth of rivals like Ford Motor Co. Stellantis stock in New York is up 26% since the merger. At $23.65 per share, Ford's is up 105% since then. Tesla Inc.'s 1,088.12 share price rose almost 29% over the year. General Motors Co.'s stock price of $62.74 puts it up 13%.
Shares of Rivian Automotive Inc., which went public in November, closed at $90.01, down 11% on Wednesday on news of Stellantis' deal with Amazon as the e-commerce giant has ordered 100,000 electric vans from Rivian.
“Stellantis hasn’t gotten as much of a stock bump, and that’s partly due to the fact that aside from what PSA has been doing in Europe, we haven’t actually seen a whole lot roll out from there," said Sam Abuelsamid, principal e-mobility analyst for market research firm Guidehouse Inc. "We still don’t have an EV in North America from Stellantis.
“Last year, we saw a number of presentations from Stellantis. Now, we’re starting to see the first signs of products that are using these technologies.”
Ford this week said it would double its expected annual production of the F-150 Lightning pickup truck to 150,000 vehicles when deliveries begin this spring. That came just ahead of GM on Wednesday unveiling its all-electric Chevrolet Silverado, which will be available early next year. Meanwhile, Stellantis won't launch an electric Ram pickup until 2024.
But Ram had its second-best year in 2021, behind only 2019 since it separated from Dodge a decade earlier. Ram's U.S. sales increased 4% from 2020. Its pickup surpassed sales of the Silverado in 2021 as automakers battled a global microchip shortage.
"It's in the making," Tavares said of the electric truck. "It's now being adjusted every month to improve our specs and our capabilities, taking into consideration what our competitors are doing. 2021 was one more record year for Ram ... in terms of market share, in terms of profitability, in terms of appeal and quality."
Stellantis also has yet to launch the hands-free assisted driving features that are expected to become available this year on some vehicles like the Jeep Grand Cherokee. This would be the equivalent of GM's Super Cruise, which is no-cost for the first three years and then $25 per month, or Ford's BlueCruise, which has a $600 activation fee for the first three years.
Yves Bonnefont, Stellantis' chief software officer, said Stellantis plans not to make the "Level 2+" technology developed with BMW a subscription-based service in the short term. The company, however, does see opportunity with on-demand services.
"Like, 'OK, I'm going to go on a vacation trip. I know I'm going to be driving several thousand miles, and I want to get that service for a certain period of time,'" Bonnefont said. "We're looking into that to understand if we can find a business model that would be attractive to both our customers and ourselves."
Stellantis does plan to profit from digital services and subscriptions that it expects could represent $22.5 billion in revenue by 2030. How much customers could pay will depend on a vehicle brand and what they want in terms of convenience and capability, Bonnefont said. Stellantis is looking at a connectivity package that might be the cost of a monthly cell phone bill.
Tavares also highlighted the promise of $5.5 billion in cost savings from the merger and that Stellantis is able to leverage its portfolio of 14 brands that provide the scale for significant investments and partnerships like the one with Amazon.
"There is a mutual respect to the fact that Stellantis is a significant player of mobility in the world," Tavares said. "If we were not the size we have with our 14 iconic brand portfolio, we could not have those partnerships, we could not spend so much money so fast to develop such high-technology performance in our customer experience journeys and therefore the customer would not be able to benefit from that."
The Amazon deal signals that Stellantis is doubling down on its vision to become a sustainable mobility tech company, analysts say.
"They are viewed as the little brother to GM and Ford," said Daniel Ives, analyst at investment firm Wedbush Inc. "They are trying to change that. The Amazon deal was a shot across the bow. Words are cheap. It’s about execution, and when Amazon signs a deal like that, it’s significant."
Synergies and scale will help Stellantis absorb the 50% increase in cost from electrification while maintaining a double-digit margin starting in 2026, the CEO said. That means having the scale to decrease the cost of EV components and batteries and to dilute the costs of research and development and capital expenditures. The automaker also is looking at ways to decrease distribution costs. The company says it's 30% more efficient in expenditures than its competitors.
"What I would like to tell my grandkids is that as the CEO of this company, I am bringing to them as a generation mobility solutions that will protect the unique planet we have," said Tavares, 63, a grandfather of four. "We are bringing our fair share to contribute to fixing the global warming problem."