Stellantis, which includes brands such as Dodge, Alfa Romeo, Ram, Citroën, Peugeot and Opel, has halted construction of an automotive battery plant in Canada. The project was planned to involve an investment of more than CAD 5 billion (USD 3.7 billion) and has been suspended due to negotiations with the federal government over financial support. The company claims that the Canadian government did not hold up its end of the bargain, which was related to the CAD 13 billion subsidy to German carmaker Volkswagen that the government promised.
New jobs
Stellantis, along with South Korean manufacturer LG Energy Solution, would like to achieve an annual production capacity in excess of 45 gigawatt-hours and provide approximately 2,500 new jobs for Canada's Windsor region as part of its plan. The government has positive expectations from the negotiations. However, Finance Minister Chrystia Freeland stressed that government resources are not unlimited and appealed to the Ontario provincial government to hold up its end of the bargain. Ontario Premier Doug Ford has asked the federal government to support Stellantis as well as Volkswagen, as the latter has received the largest single investment in the electric vehicle supply chain from Canada. Industry Minister Francois-Philippe Champagne stressed the need for Ontario to pay its fair share to break the current impasse.
Strikes in Italy slow production
Workers in Italy are protesting against working conditions at the Stellantis plant in Pomigliano, southern Italy. The plant produces Alfa Romeo Tonale and Fiat Panda SUVs. The plant employs more than 4,000 people, more than 20 percent of whom are currently on state-paid leave. The company wants to cut costs while increasing production due to the current EV trend, so it is pushing employees to perform at higher levels during shifts while not hiring new labor. A company spokesman denied allegations of neglecting working conditions. He stressed that the company respects its employees even in light of the automotive industry’s competitive nature. In March, Stellantis reached an agreement with Italian unions to raise wages, which are expected to rise by 11 percent in the first two years. The company's revenue rose 14 percent to 47.2 billion euros ($52 billion) in the first quarter on chip shipments and product price increases. For the rest of the year, the outlook remains cautious due to rising vehicle inventories, but Stellantis promises positive cash flow.
Symbio's hydrogen powertrain
In addition, the company announced that it plans to acquire a 33.3 percent stake in Symbio, a company focused on zero-emission hydrogen mobility, in a move to expand its automotive footprint and move closer to a sustainable future. This could enable Symbio to expand its presence in Europe and the US. Stellantis CEO, Carlos Tavares, highlighted the importance of using all available technological tools for alternative vehicle propulsion to combat environmental threats. He also expressed the company's ambition to achieve carbon neutrality by 2038. Symbio aims to produce 50 thousand fuel cells per year at its gigafactory in Saint-Fons by 2025. Production will start in the second half of 2023 as part of the HyMotive project, which sees hydrogen as a key component in the decarbonisation of the automotive industry.
Shares languish
Stock prices have risen 15 percent over the past year. However, looking at the stock's five-year performance, we can see that it is still in the red due to pandemic-related restrictions that have hit suppliers and car companies hard.* Given the current situation on global markets, it may take some time for the company's shares to fully recover, but at the moment they appear to be on track. [1]
Stellantis stock performance over the past five years (Source: Google)*
Olivia Lacenova, chief analyst at Wonderinterest Trading Ltd.
* Past performance is no guarantee of future results.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.
