Stellantis unveils share buybacks, predicts 'turbulent' 2024
Despite warning of a "turbulent" year expected in 2024, multinational automaker Stellantis (STLA) topped earnings estimates, issuing a share buyback program. Additionally, Ford (F) CEO Jim Farley commented on his willingness to cooperate with rivals to position itself better in Chinese markets.
Yahoo Finance Autos Reporter Pras Subramanian breaks down the latest comments from auto executives, including forward strategies for EV segments.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
- Stellantis shares popping as the automaker reports earnings and announces a new buyback plan, despite warning of a turbulent year ahead. Senior autos reporter Pras Subramanian was on that call, so a little bit of a mixed messaging there maybe.
PRAS SUBRAMANIAN: Yeah, you know, so strong earnings from full year 2023. So good revenue, good profit outlook here, but they're kind of warning about this turbulent year ahead. A couple of headwinds they're talking about is EV product mix, of course, the kind of shifting prices and demand and the offerings they have at the dealerships, talking about, of course, higher labor costs because of the strike and then, of course, price normalization, lower prices coming in. So these are the kinds of things that they're concerned about, but they think that, at least, in America compared to the other big three, they have better pricing power. And they can kind of wade through that.
On the call, CEO Carlos Tavares was on there. This guy's kind of known as a-- I wouldn't say a maverick, but he's very opinionated. And he talks about how we weren't ready for the EV transition years ago, and now, he's sort of having his kind of moment to roost here. But he does say that, in 2025, in North America, there will be profitable with EVs. He does think that a shared platform, which they did as opposed to GM, where they said this one platform, you can use for gas and EVs, and also, he said that margin parity is needed for EVs and ICE vehicles in order for them to compete against "the Chinese offensive."
- How close are we to that?
PRAS SUBRAMANIAN: I mean, he thinks that, in 2025, you'll start climbing towards that. Probably not till mid to late decade, I would say, yeah, yeah, for sure, for sure.
- So we heard from Stellantis, Pras, today, but also, Ford's Jim Farley. I thought he had a lot of interesting things to say. I keep talking about China, too, and kind of the ramping competition there, but also, it was just kind of open to working with others.
PRAS SUBRAMANIAN: Yeah, there's sort of been rumblings of this for a while now. He kind of hinted at sort of how they can make cars and batteries cheaper in the earnings call, and today, he sort of indicated that. He could work with potentially Chinese partners to do that from a battery point of view. Adam Jonas has been talking about this for a while now, or in this last note, hinting that could be a possibility.
They have a JV operation in China that they could leverage there, but also, just like Tavares warning about China, warning about how he needs to have a really cost competitive, cheaper EV platform to make these cars that people need at a price that'll work for them. And, also, today, this is new to me. He mentioned that 20% to 30% of revenue is at risk due to Chinese automakers coming to the US. Right now, there's almost a 30% tariff on Chinese made vehicles, so they're probably happy about that. But we'll see if that sticks around.
- All right, Pras, thank you. Appreciate that.
