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Stellantis CEO Carlos Tavares made a point of repeating himself during the company’s first-ever earnings call on Wednesday, vowing he would not allow the company to be defined by critics so soon into a new era.
“We will not be cornered as a legacy company,” Tavares said late in the call, echoing a point he made at least a dozen times before that. “We will not be a dinosaur.” The words “disrupter” and “innovator” were repeated over and over, too.
You can forgive Tavares if he appeared defensive on those points. The Peugeot Group and Fiat Chrysler—the companies that formally merged in mid-January to form Stellantis, now the world’s fourth-largest carmaker based on sales—were the last two major family-owned carmakers left in Europe, and neither was known as a technological pacesetter. Both companies had been second-tier players when it came to electric vehicle technologies and self-driving cars, and combined they were barely a blip in China, the world’s largest and fastest-growing car market.
But just weeks after the STLA ticker symbol first appeared on the stock exchanges in Paris, Milan, and New York with great excitement—Tavares and ex–Fiat Chrysler head Lapo Elkann were on hand for each’s home-market opening and then flew together to New York for the opening there the following day—Tavares announced all that is going to change.
“If you could reduce Tavares’s remarks to a single idea, he was telling investors, suppliers, and other stakeholders, ‘We too can innovate,’” Paolo Bricco, a longtime auto-sector analyst with the Italian financial daily Il Sole/24 Ore and the author of several books about Fiat, told Fortune.
Tavares said electric cars were the company’s new main focus, with plans to sink billions into the development of lighter, higher-capacity, and faster-charging batteries. Officials said several new electric car models are expected to hit showroom floors in 2022 and 2023, adding that the merger would allow for the use of common frames and technologies to be used in most of Stellantis’s 14 brands, driving down costs and speeding up development.
Tavares cited the investment in Archer Aviation, a leader in “vertical flying vehicles,” as another example of the company’s dedication to being on the technological vanguard.
On China, Tesla, and permits
When it comes to what the CEO called Stellantis’s “China problem,” Tavares immediately quashed speculation that the company might elect to abandon the complex Chinese market altogether. “We aren’t going anywhere,” he said. He wouldn’t elaborate on the company’s plans in the world’s second-largest economy except to say that brands there needed to carve out a niche in the Chinese psyche. “We need to avoid commoditization” of our brands in China he said.
Tesla, the world’s most valuable carmaker, came up several times as a model for organization and innovation. When it came to the emissions credits Peugeot and Fiat Chrysler bought from Tesla last year, an official said they would spend around €300 million ($365 million) this year, roughly in line with the amount spent by the separate companies in 2020. That ought to be good news for Tesla bulls as those permits make up a huge chunk of Tesla’s profits.
The financial results released Wednesday were the first under the Stellantis banner—as such, they were released simultaneously in French, Italian, and English—but they were technically the final report cards on the predecessor companies. The company reported a 7.1% adjusted operating margin worth €3.4 billion for Peugeot and a 4.3% margin and an adjusted net profit of €1.9 billion for Fiat Chrysler.
If they had been combined in 2020, the companies’ operating income margin would have been 5.9%, or near the middle of the range of 5.5% to 7.5% in the duo’s forward guidance for 2021, showing that the new era of innovation won’t appear on the balance sheet, at least not immediately. But the company is sticking with its promise to show improved profitability in the quarters ahead.
Despite Tavares’s defiant presentation on Wednesday, it was Stellantis’s toughest critics who had the last word. Investors on both sides of the Atlantic sent shares in the automaker downward.
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