In a stark announcement, a major automotive manufacturer has raised the alarm about a potential disaster on the horizon for both automotive dealers and new car buyers. Stellantis, the company behind iconic brands like Chrysler, Jeep, Dodge, and Ram, is cautioning that the current trajectory could lead to a future where new cars become 40 to 50 percent more expensive due to electric vehicles (EVs). Moreover, the warning extends beyond costs to the availability of vehicles, creating a challenging scenario for dealers who may find themselves with too few cars to sell.
The Hidden Costs of EV Technology
Stellantis highlights a crucial factor contributing to the potential price surge: the costs associated with evolving vehicle technology. While manufacturing electric vehicles might seem less complex compared to traditional internal combustion engine vehicles, the intricate technology required for EVs can be significantly pricier. The CEO of Stellantis underscores the real implications of this technology cost, suggesting it could lead to job cuts in the automotive industry.
Job Cuts Before Mass Adoption
Even as EVs currently make up a relatively small percentage of new car sales, around five to ten percent in some markets, Stellantis is already trimming jobs in anticipation of the industry’s shift towards electric. The CEO warns that the impact goes beyond job cuts; it could influence buyers directly. The challenge lies in making electric vehicles affordable for the middle class, as the current trajectory suggests a potential 40 percent increase in the overall electrified powertrain cost compared to conventional vehicles.
The Affordability Dilemma
With new cars already averaging $42,000, a 40 percent increase would push the cost of an electric vehicle close to $60,000. This poses a significant challenge to the industry, as consumers may find it difficult to justify such a price increase. The CEO’s warning underscores the urgent need for changes in the manufacturing process to prevent a scenario where electric vehicles become prohibitively expensive, limiting their adoption.
The Domino Effect on Dealers and the Market
The warning extends beyond the individual buyer to the automotive market as a whole. If middle-class consumers shy away from these pricier electric vehicles, it could lead to a contraction of the market. This, in turn, would have a cascading effect, reducing the need for manufacturing plants, employees, suppliers, and dealers. The CEO describes this as a potential employment problem that could also undermine climate goals.
A Race Against Time
In a bold prediction, the CEO foresees a critical juncture for the industry by the end of the decade. Without significant changes, the transition to electric vehicles could become a management and industry transition challenge of unprecedented scale. The success of this transition hinges not only on the technological advancements but also on making EVs accessible to the middle class.
From Hero to Zero
In a poignant statement, the CEO warns that failure to address the rising costs of electric vehicles could transform the industry from a hero to zero within three years. The promise of a cleaner, more sustainable automotive future could be derailed if urgent measures aren’t taken to make electric vehicles both technologically advanced and financially accessible to the masses. As we stand at the cusp of what could be a historic industrial revolution, the fate of the automotive industry hangs in the balance, awaiting the necessary innovations to navigate this challenging transition.