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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.

Ram and Jeep diesel emissions allegations spur class action lawsuits

This shouldn't come as a surprise. Last week, the EPA issued a notice of violation to FCA after it determined that Jeep and Ram installed eight undisclosed auxiliary emissions control devices on diesel vehicles. Since then US law firm Heninger Garrison Davis, LLC and Canadian firm Sotos LLP have launched class action suits on behalf of owners. These latest lawsuits are unrelated to a previous class action suit brought against FCA and Cummins over NOx emissions in 2007 to 2012 Ram models. The violation notice – and the subsequent lawsuits – covers 2014 to 2016 Jeep Grand Cherokee and Ram 1500 models equipped with the 3.0-liter turbodiesel V6, a total of about 104,000 vehicles in the US. The EPA says that while the emissions control devices aren't necessarily illegal, installing them without disclosing them to the EPA is, as they produce more emissions in real world use than in testing. Skirting certification in this way might be a violation of the Clean Air Act. FCA could see fines of up to $45,000 per vehicle, depending on the outcome of the EPA investigation. FCA denies that these are cheat devices, and has proposed software updates to bring the vehicles into compliance. As for the lawsuits, Heninger Garrison Davis says that "Fiat Chrysler marketed those vehicles as environmentally friendly with enhanced fuel efficiency, better performance, and lower emissions. Although the diesel vehicles were successfully marketed as 'clean,' their environmentally-friendly representations were deceptive to consumers." The suit seeks an undisclosed amount of compensation for owners of these vehicles. In Canada, Sotos LLP is seeking $250 million in damages on behalf of owners. This suit, filed in the Ontario Superior Court of Justice, also claims deception on the part of FCA, "resulting in losses and damage" to owners. These are similar claims to group actions against Volkswagen with regard to its diesel emissions cheating scandal. While VW is fixing or buying back many of the affected vehicles, the company is defending itself against some suits on behalf of owners, saying it expects " no decline in the residual values of the affected vehicles as a result of this issue." Don't be surprised if FCA mounts a similar defense.

2014 Ram Promaster recalled over brake hoses

It's barely been a year since Chrysler brought the Fiat Ducato over to these United States as the Ram Promaster, but already it's being subjected to its second recall - both of them revolving around essential controls that are critical to the vehicle's operation.
The first came less than a month ago, when the National Highway Traffic Safety Administration issued a recall for nearly 10,000 of the vans due to a sticky accelerator pedal. Now Chrysler has issued a second recall to deal with the brake hose.
This second recall affects some 6,800 units of the ProMaster, half of which Chrysler says are on dealer lots. The automaker is instructing dealers to inspect both the vehicles it has in stock and to bring in customer vehicles to perform the same check, to ensure that the brake hose was properly installed in the first place. If not, the brake hose will be replaced.