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CEO Carlos Tavares is bullish about his plans for the conglomerate, but will it be enough?

A significant moment came in yesterday’s Stellantis future strategy presentation when CEO Carlos Tavares spoke of the company's “pride” at being a legacy car maker. 'Legacy' has long been seen as a dirty word among auto maker investors, many of whom see companies with outmoded operations, outsized payroll and a creaking industrial base in comparison with more nimble start-ups.

Yesterday’s event, held in Amsterdam, Stellantis’ official corporate home, was partly about convincing the assembled analysts and journalists that this conglomeration of historical brands - now a year old - was worth more than its sluggish stock price suggested.

Investors have not reacted as you might have expected to Stellantis’s recently posted profit of €13.4 billion (£11.2bn) representing an outstanding 11.8% profit margin. The company’s share price has remained sluggish and its valuation based on that price is still behind that of US start-up Rivian. Tesla meanwhile remains the beacon for automotive investors.

However, Tavares pitched a strong case for legacy in the strategy, dubbed Dare Forward 2030. “It shows a serious commitment and ability to manufacture efficiently at scale. It shows grit, perseverance and staying power,” he said. “Other companies have yet to prove this.”

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He admitted Stellantis needs to learn the skills of younger firms (which he didn’t name), to vertically integrate elements like software. But he also said they have lessons to learn from Stellantis. “They know when they reach one million vehicles [per year], they will have problems with high-volume efficiencies in their plant quality,” he said. “We have to learn faster than they do.”

He laid out plans described as “very challenging and ambitious” that called for a “shift in mindset”. For example, the company will speed up the transition to EVs, with all brands going electric in Europe by 2030. By the same date, sales of its US brands will be 50% EV. It will launch 75 all-electric models by 2030 and it will launch only electric models for its premium brands from 2025 on.

Teases and reveals of future models in the presentation were almost exclusively restricted to US-centric brands, including an electric Jeep, an electric Ram pick-up and electric Dodge muscle cars.

He promised analysts that this will be done with utmost cost efficiency. Distribution costs, including those incurred by selling through dealers, will fall 40% by 2030. The cost of EVs also will tumble by 40%.

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Stellantis is an “all-weather company”, Tavares said, one that can survive any number of shocks in a tumultuous period. The focus on costs that Tavares has become so famous for means that by 2030 the company will still make money if sales for any reason drop to half of the predicted annual figure.

Meanwhile, revenues are forecast to double to €300bn (£250bn) annually by 2030, with profit margin promised at more than 12%. “This company is a big cash machine,” he told journalists.

However, cash gets you only so far. “It’s not a money problem. It’s an execution problem,” he said. To become more nimble on products and services, Tavares promised a different mindset, with the company’s “people” (not employees) at heart.

“We are making Stellantis an extraordinary place to work and a magnet for people with the drive to make customers’ lives better,” he promised.

If anyone can do it, Tavares can. Philippe Houchois, analyst at the bank Jefferies, said: "The fear of failure is part of the personality of Tavares and he drives his teams in a way that looks a little bit like Tesla. They do something Monday and on Tuesday morning they question how they can do it better. He’s got the right mindset to move from legacy to something else, whatever that is.”

However, the strategy itself is seen as overlapping with those of other legacy car companies, who are all striving to shake themselves of the impression they’re too big and set in their ways to react to the new electric, software-defined future. “None of what they told us in terms of financial targets are very different from what GM [General Motors] told us in October,” Houchois said. In that strategy plan, GM also voiced a goal to double revenues.

Houchois, in his report on the Dare Forward strategy, recommended his clients buy Stellantis stock, but pointed out that the company’s ambitious target “implies structural industry change, where not every OEM can win or even survive”.

The Dare Forward strategy lacks “vision”, in the opinion of another analyst, who spoke anonymously because they hadn’t been authorised by their company to give comment.

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Their view was that Tavares was a fantastic chief operating officer in his execution, but has stumbled in his CEO role to communicate an overarching idea for how the company will fit and prosper in the future of automotive.

The stock market is hard to please. Tavares has successfully blended two companies with a combined total of 14 brands, many of whom were being written off financially before he pulled them into the Stellantis ‘matrix’ of scale efficiencies and made them profitable. The plan promised more of the same while ensuring the preservation of ‘freedom of mobility’, a favourite phrase meaning to just get a car and drive that, Tavares feels, is mightily threatened by the sheer cost of the shift to electric.

Perhaps the strongest ‘buy’ recommendation for any company should go to the one whose proven laser focus on reining in costs could play a key role in making electric cars affordable.

Whether the future will belong to the start-ups or the legacy makers hasn’t been decided as they each strive to capture the others’ strengths. “Who is going to reach that level of expertise sooner?” Tavares asked, before employing another favourite analogy inspired by his weekend hobby. “That’s the race. We are ready for the race.”

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