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EV cost burden pushing automakers to their limits, says Stellantis' CEO Tavares

DETROIT — Stellantis CEO Carlos Tavares said external pressure on automakers to quickly shift to electric vehicles potentially threatens jobs and vehicle quality as producers struggle with EVs' higher costs. Governments and investors want car manufacturers to speed up the transition to electric vehicles, but the costs are "beyond the limits" of what the auto industry can sustain, Tavares said in an interview at the Reuters Next conference released Wednesday. "What has been decided is to impose on the automotive industry electrification that brings 50% additional costs against a conventional vehicle," he said. "There is no way we can transfer 50% of additional costs to the final consumer because most parts of the middle class will not be able to pay." Automakers could charge higher prices and sell fewer cars, or accept lower profit margins, Tavares said. Those paths both lead to cutbacks. Union leaders in Europe and North America have warned tens of thousands of jobs could be lost. Automakers need time for testing and ensuring that new technology will work, Tavares said. Pushing to speed that process up "is just going to be counter productive. It will lead to quality problems. It will lead to all sorts of problems," he said. Tavares said Stellantis is aiming to avoid cuts by boosting productivity at a pace far faster than industry norm. "Over the next five years we have to digest 10% productivity a year ... in an industry which is used to delivering 2 to 3% productivity" improvement, he said. "The future will tell us who is going to be able to digest this, and who will fail," Tavares said. "We are putting the industry on the limits." Electric vehicle costs are expected to fall, and analysts project that battery electric vehicles and combustion vehicles could reach cost parity during the second half of this decade. Like other automakers that earn profits from combustion vehicles, Stellantis is under pressure from both establishment automakers such as GM, Ford, VW and Hyundai, as well as start-ups such as Tesla and Rivian. The latter electric vehicle companies are far smaller in terms of vehicle sales and employment. But investors have given Tesla and Rivian higher market valuations than the owner of the highly profitable Jeep and Ram brands. That investor pressure is compounded by government policies aimed at cutting greenhouse gas emissions. The European Union, California and other jurisdictions have set goals to end sales of combustion vehicles by 2035.

Chrysler recalling hundreds of thousands of Jeep Grand Cherokee and Commander SUVs

The public might associated ignition switch recalls with General Motors - and with good cause - but that's not the only automaker calling its vehicles back in to fix that sort of issue.
Last month we reported that the National Highway Traffic Safety Administration was investigating an array of Chrysler Group vehicles for electrical-related safety issues. The administration and Chrysler subsequently issued a recall for 700,000 Dodge Journey crossovers, Dodge Grand Caravan minivans and Chrysler Town & Country minivans. But while the Jeeps that were also under investigation were not covered in that recall, they are being addressed in a separate one now.
Although Chrysler reports that it is only aware of a single accident stemming from this issue, it is "committing now to conduct a recall out of an abundance of caution." The recall affects the 2006-2007 Jeep Commander and 2005-2007 Jeep Grand Cherokee, of which it reports there are 792,300 on the road: 649,900 in the United States, 28,800 in Canada, 12,800 in Mexico and a further 100,800 outside of North America.

Are future vehicular hacks inevitable?

Before the hack of the Uconnect system in a Jeep Cherokee resulted in a 1.4-million vehicle recall, the potential software vulnerabilities in vehicles were already a hot topic with Congressional inquiries and even proposed legislation in the US. As cars' interconnected systems gain the ability to go online, they become open to a host of new threats. Automakers are trying to stop this, but it might be too late to put the genie back into the bottle. Throughout 2015, the issue of software security in vehicles has become increasingly vital. For example, the recent Jeep case wasn't even the biggest hack this year. In February, a major flaw was discovered in the BMW Connected Drive service that allowed researchers to remotely lock and unlock the doors and potentially affected 2.2 million cars. The fix was an over-the-air patch for the problem. Automakers are actively working to fix the issues. Mercedes-Benz, BMW, and Audi reportedly are using encrypted connections and firewalls in their vehicles to prevent hacking. "Absolute, 100-percent safety isn't possible," Daimler spokesperson Benjamin Oberkersch said to Automotive News Europe. "But we develop our systems, tested by internal and external experts, so they're up to date." These vulnerabilities seem to be popping up more often. A successful hack took $14 in parts from Radio Shack in one case. There was also a 60 Minutes report earlier in the year about DARPA's ability to hack into OnStar to take control of a Chevrolet Impala. Experts aren't so sure companies can contend with hackers' advancement. "The difficulty for the carmakers at the moment is the question whether they can keep pace with advances in technology, and especially hacking technology," Rainer Scholz, executive director for telematics consultant EY, said to Automotive News Europe. "We seriously doubt they can." At this point, vehicle hacks are coming more from researchers looking for holes than from those with malicious intent. Still, the vulnerabilities are definitely there. It's up to automakers to keep patching the problems before they become dangerous to drivers. Related Video: News Source: Automotive News Europe - sub. req.Image Credit: Bill O'Leary / The Washington Post via Getty Images Audi BMW Jeep Mercedes-Benz Safety Technology Emerging Technologies hacking cyber security