One thing the automakers generally don't like to talk about is which of their car models are actually profitable, and if so, by how much. After all, why would you want to give away such competitive data? But over the last year or so, we've seen a great example of the effects of price cutting on profits from Tesla, which has used its superior manufacturing scale to unleash rapid-fire price cuts to spur EV sales.
It worked for Tesla, but at a cost to profit margins that Stellantis' boss Carlos Tavares isn't willing to bear at his own shop. That story leads today's Monday edition of this Critical Materials morning news roundup. Also on our docket: Panasonic wants to get its battery groove back, and what to expect on the EV front from this year's Super Bowl. Let's dive in.
30%: Stellantis' STLA Large Platform Also Aims To Keep Costs Down
When you consider the individual histories of brands like Dodge, Alfa Romeo, Jeep and Maserati, it is absolutely wild that so many of those cars now share a great deal of mechanical components—and in the electric era, one common platform. Nobody saw that coming in the 20th century, I can tell you that.
As we detail in our own report today, the goal of the new STLA Large EV platform is flexibility. (So much so that it can run internal combustion engines.) This allows the mega-conglomerate that is Stellantis to compete better on the electric front; after all, Tesla is really mostly only the Model 3 and Model Y company these days, whereas Stellantis makes approximately six billion different cars, the last time I checked.
But while Tavares seems to be finally getting serious about the EV race after years of skepticism, he is not inclined to chase Tesla's price cuts. Here's more on the media briefing around the STLA Large platform from The Detroit News:
"If you just go and cut pricing, this regarding the reality of your cost situation, it's a race to the bottom, and a race to the bottom will end up with a bloodbath," Tavares said during a virtual presentation. "And that's exactly what I'm trying to avoid."
Part of that is the vehicles the automaker produces. Stellantis recently launched its first all-electric vehicle in North America, with Tavares saying he delivered the first Ram ProMaster commercial van to customer Amazon.com Inc. By the end of the year, the company will have eight EVs here, up from none.
Underpinning a number of those models and eight in total through 2026 will be the STLA (pronounced "stella") Large platform. Designed for BEVs, the platform also can support hybrid and internal combustion engine powertrains.
It will support full-size vehicles in the D and E segments, including cars, crossovers and SUVs. Typically, it would take two to three platforms for all of the applications STLA Large will handle, said Marc Issner, global engineering head of the platform.
In other stories, he's quoted as adding, "I know a company that has brutally cut pricing and their profitability has brutally collapsed," almost certainly referring to Tesla.
At the end of the day, it helps to remember Tavares is an old Carlos Ghosn acolyte from back in the day: cost-cutting and cost control are what he dreams about when he goes to sleep at night. And the auto industry as a whole has become addicted to hefty profit margins, especially on big trucks and SUVs. A lot of brands may not even be able to function without those, at this point.
Still, price-cutting has been key to Tesla's big sales success this past year, and I'd argue the same for the Chevrolet Bolt and Hyundai Motor Group EVs too, to a lesser extent. People don't just want affordable EVs—they want affordable cars, period. Whether any automaker besides Tesla (or perhaps the Chinese companies) will be able to deliver on that front for a while remains to be seen.
60%: Panasonic Is Determined To Lead Japan's Comeback
Here's another thing nobody in the 20th century probably would've predicted: that Japan's technological powerhouse status would become as threatened by South Korea and China as it is today. As recently as the 1990s, Japan was the leader in both semiconductors and lithium-ion batteries. It has since lost those titles to other Asian competitors.
And as Nikkei Asia reported last week, this mentality seems to be the dominant one in Japan when it comes to EVs and their batteries:
Slower-than-forecast demand for EVs in the U.S. has nonetheless introduced uncertainty into the Japanese battery industry's plans, leaving many executives wondering whether they had been right all along to be cautious. According to Motor Intelligence, the year-on-year growth rate for EV sales in the U.S. stood at 42% in November, down from 74% in October 2022. Mitsutaka Fujita, a researcher at Techno Systems Research, told Nikkei Asia: "When the market outlook is uncertain, as it is now, it is more beneficial to start later." He added, "You only need to invest the minimum necessary."
But that story says Japanese giant Panasonic is not taking this moment lightly. It's trying to move fast on EV batteries to help restore Japan to greatness on this front, and the new planned gigafactory in De Soto, Kansas you see rendered above is key to that effort.
That Nikkei story is fascinating and worth a read in full, in part because it paints a picture of Panasonic being somewhat at odds with Japanese automakers over how fast to move on EVs—it even name-drops Toyota. Japan's auto industry has been remarkably cautious on the electric front compared to America and Europe, but now the technological prowess of Korea and China has it really spooked.
Remember, Panasonic remains Tesla's biggest supplier in the U.S. And while that move was incredibly risky and shaky at first, Panasonic Energy's executive vice president and chief technology officer told the publication it has since paid off handsomely:
In the end, Panasonic Energy was able to put the factory back on its feet, with roughly 400 Japanese employees helping with production, and a push to make manufacturing machines more autonomous. The experience taught Panasonic valuable lessons on how to mass-produce EV batteries.
"[The Nevada plant has] improved a lot since the beginning, so much so that we could make the decision to go into Kansas," Watanabe said. "The first Nevada factory with Tesla brought risks far bigger than now. If we hadn't taken that risk, there would have been no fruit to pick."
[...] "Each [factor] requires an investment, so it's a risk no matter how cautious you are. ... There is no 100% safe solution. Anyway, what happens if we don't act? Things will just get worse."
Those are some of the key questions facing Japan and the rest right now: how fast do you move on EVs, and what happens if it's too fast—or not fast enough? But it seems like Panasonic is willing to roll the dice on this one and see what happens, not be overly cautious to the point of irrelevance. If they don't act now, Watanabe said, "that would be the beginning of the end. We have the technology, what we need is money and action."
90%: BMW, Kia, VW Plan Super Bowl Ads
We're three weeks out from Super Bowl LVIII here in the U.S., and I'm still hoping for the sake of my many Motor City friends and colleagues that the Detroit Lions make it in. But even if they don't, the car industry will still be represented by at least three companies pushing EVs this year. Here's Automotive News:
VW's U.S. lineup gains a notable model in the second half of the year: the electric ID Buzz, a retro-styled three-row minivan.
The length of VW's 2024 Super Bowl commercial will be revealed later, a company spokesperson said. Kia's 60-second spot from the David & Goliath agency will promote the EV9 three-row electric crossover.
And BMW is also planning a 60-second spot featuring an EV and an unnamed celebrity, the automaker's chief marketing officer said.
One especially notable absence this year is General Motors, which declined to advertise there for the first time since 2021 due to costs related to last year's United Auto Workers strike and, likely, its own slow EV rollout. EV ads largely peaked around the 2022 game as the industry figures out the pace of adoption.
100%: Is Stellanits Making The Right Move?
Tavares is essentially insisting Stellantis' many brands not sell EVs at a loss like other automakers have. Is this the correct approach, or does scaling adoption inherently mean taking a bath for a while?
