The big merger between the French automaker PSA group and Fiat Chrysler Automobiles has been the talk of the auto world for the last few months. Having first announced a possible merger in 2019, the pandemic put a halt on these plans until recently, when the groups finally announced that their brands had merged to form the all-new Stellantis on January 16th 2021. The merger should allow both groups to save on parts, raw materials and even technology, totalling an estimated $6 billion over the next few years. These cost savings could be imperative for the car brands, as automotive sales around the globe have been hit hard by the effects of the pandemic and could take years to recover. Jefferies analyst Philippe Houchois said, “Stellantis will be a sort of conglomerate of brands, some great and some not so good and most very regional.” Houchois also stated that “The merger will be a good opportunity for a reset.” Now that the merger has happened, let’s dive deeper into the new Stellantis brand, and how it fits into the auto world.
Spotlight on Stellantis
Stellantis is the fourth-largest automaker in the world by volume, with 14 car brands under its umbrella, including Chrysler, Jeep, RAM, Dodge, Alfa Romeo, Abarth, Fiat, Lancia, Maserati, DS, Citroen, Opel, Peugeot and Vauxhall all under the new Stellantis group. Former CEO of PSA Carlos Tavares will lead Stellantis as the CEO, and former FCA CEO Mike Manley will head up operations for Stellantis in North America. According to Tavares, the merger will allow both groups to come together and create effective new cars while allowing each individual brand the chance to bounce back. As the world shifts towards creating more sustainability and increasing international exposure centred on green energy use, Stellantis has announced its own focus on electric vehicles, with an ambitious plan going forward. At the moment, Stellantis has 29 electric vehicles on the market, however, the group aims to increase that to 39 by the end of 2021. The overall idea is that by 2025, Stellantis will be producing one electric vehicle for every new vehicle that is launched globally. The group also believes that the merger will help each brand to successfully avoid job losses and factory closures.
State aid for Stellantis
As a part of the global shift towards green energy, the European Union has recently approved a program that will give state aid to the likes of Tesla, Stellantis and many other leaders in the sector to the tune of 2.9 billion euros. The aim of this is to assist automakers with battery projects that will help Europe get ahead on the path towards switching to renewable energy. It has been said that this decision could prompt private investment in the same space, which could lead to roughly 12 billion euros further being invested in this area. This is the second major project that the EU has started in the battery cell production realm and it comes after the 3.2 billion euro package that was approved in 2019 to support 9 billion euros of spending, both public and private. The EU has implemented strict pollution and carbon emission standards for countries in the region, and this is further driving automakers to switch to electric vehicle production. Europe has also formed the Green Deal, whereby carbon emissions are set to be decreased by 55% from the levels of 1990 by the year 2030. The EU’s battery project will cover everything from raw materials to the design and manufacturing of batteries, and even the disposal and recycling, and the state aid is poised to help with new technology for such batteries. As Stellantis is in line for this state aid, its approval would be a great opportunity for the new group to enter Tesla’s playground, in a bid to make a name for itself in the electric vehicle realm and the future of automobiles.
Electric opportunities up ahead
Stellantis may be a new company, but it’s sure seen its share of volatility so far this year. Share trading prices started on an upward trajectory, rising 11% between the 11th and 20th of January, before dipping 9% over the next few days by the 28th. Stellantis share prices then began a slow and steady rise of 7% by the 8th of February.
What’s ahead for brands like Stellantis? A great number of things, it seems, as the company brings together some of the most well-known and influential carmaker brands in the world. Add to that the ambitious drive toward renewable energy that may see Stellantis brands began to give sector leaders like Tesla a run for their money. One thing is for sure—the future of automobiles is bound to be interesting, as many changes are amiss.