| 2024 (expected) | 2023 | 2022 | 2021 | |
|---|---|---|---|---|
| Net income [billion €] | 8.3 | 18.6 | 16.8 | 14.2 |
The table at the top of this post shows Stellantis NV’s net income for the last four years. Overall, we are talking about 57.9 billion euros, a large part of which was distributed as dividends. Nevertheless, a few days ago, the company’s CEO resigned. Officially, this is because he lost shareholders’ support after a dramatic reduction in earnings from the previous year. In Italy, a nationwide controversy erupted, primarily because of the CEO’s severance pay, which was deemed unethical by many not only because the 2024 result was so poor, but more importantly because of its magnitude compared to the salary of the same company’s employees. Stellantis was born from the merger of “Italian” FCA (FIAT Chrysler Automobiles) and French PSA. In the decades before the merger, FIAT and then FCA enjoyed enormous benefits from the Italian government. Those who tried to make an estimate speculated they may have received close to 200 billion euros in direct and indirect subsidies. For this reason, several Italian politicians naively feel entitled/obligated to take the opportunity of this controversy to summon the company’s president. Because of the aid provided for decades, they foolishly believe they have the power to force this multinational corporation to invest heavily in Italy, reviving Stellantis’ manufacturing/designing sites in our country and, therefore, creating a lot of new jobs. In contrast, the company claims the challenging period it is going through is due to the sudden energy transition imposed by the stringent European legislation recently established, which caught it unprepared and off guard. As such, Stellantis even argues that the government — i.e., we taxpayers — should help it once more by providing further subsidies. This is the official narrative, according to national media. Let’s try to contextualize this matter by briefly summarizing some relevant facts so that we have a broader perspective.
- Tesla was founded in 2003 and acquired by Elon Musk in 2004.
- After trying unsuccessfully to undermine Western automakers in the field of internal combustion engine (ICE) vehicles, in the late 1990s, China unveiled a multi-decade plan to become the world’s leading producer of electric-powered vehicles.
- For years everybody has been talking about climate change, energy transition, sustainability, etc. Unless one lives under a rock, it is clear that we have entered an era of massive transformations in terms of economic models and lifestyle.
- Virtually all major European cities are heavily restricting access to the most central areas to ICE-powered vehicles.
- Many young people not only don’t own a car, but they don’t even get a driver’s license anymore, especially in major cities.
- Efforts to seek innovative solutions in energy storage/production and mobility are countless.
I myself, in my very modest blog, have written several times about how mobility and vehicles have already been changing for a long time1. While all this was going on, and long before the European ban was passed, European automakers’ CEOs not only insisted on releasing car models based on hopelessly, archaic, nineteenth-century technologies but also allowed themselves the luxury of making fun of Musk. Who also did not forget to remind everyone, for free, that cars are “smartphones on wheels” nowadays — to be clear, I am not a fan of Musk, despite his undoubted entrepreneurial skills. In the end, I believe there has been evident proof of a shift in everything gravitating around mobility for a while. If I was capable of detecting these signals although I don’t work in the automotive industry, how is it possible that top executives earning tens of millions of euros a year could have been unaware of them? And, after all of this, they even dare to request additional public aid, i.e., to transfer the costs of the transition — which is a market transition, firstly — onto the community. It’s too easy to be a capitalist this way, with other people’s money. Their claims are just ridiculous. From a business standpoint, it is clear that we are witnessing yet another case in which companies with a significant competitive advantage have been resting on their laurels. Stellantis and other Western automakers believed that this advantage would last forever, forgetting that it is necessary to work with intelligence and farsightedness to maintain it2. In other words, they have overlooked one of the fundamental laws of economics — no such thing as a free lunch, a mistake that no first-year economics student would make. An error that they think we should even pay for.
At the end of the day, it is time for capitalists to behave like capitalists. If they wish to save the company, Stellantis’ shareholders are supposed to put their hands in their pockets and finance the company to modernize it, assuming it is not too late. They certainly do not lack the financial resources to do so. But I’d want to offer them another bit of free advice: if they believe their job is still to manufacture vehicles, I’m afraid they’ll hit a wall. Rather, they should consider evolving into mobility platforms, as explained in this compelling article.
PS These clips describe how China has deployed its plan to conquer dominance of the electric vehicles market:
UPDATE 20241231: While we Europeans stubbornly continue to prolong the agony of the endothermic engine, the Chinese keep working on more innovative aspects, widening their competitive edge:
And neither the Swiss are twiddling their thumbs:
- Tesla Model S test drive
Is Tesla’s master plan feasible?
Is this part of future mobility?
Citroen Nemo 1 – 0 Tesla Model Y
MG MG4 Electric test drive ↩︎ - Intel is another recent example. In the last decade or so, this corporation has prioritized short-term financial results at the expense of R&D investments, losing its leadership in the semiconductor field. Not to mention the well-known story of Blockbuster, which was so short-sighted that it missed the arrival of Netflix and Internet streaming. ↩︎
LLandre.com 