Stellantis ready to abandon certain suppliers to reduce the cost of its cars?

Carmakers face the constant challenge of cutting costs to improve margins, especially on electric cars. With this in mind, Stellantis plans to end its relationships with certain suppliers and to manufacture more parts in-house.

Carlos Tavares, head of Stellantis, is facing a complex situation. Sales of some electric models, such as the electric Fiat 500, have plummeted recently, pushing even the group to temporarily suspend production and reinvest to improve the model and make it more competitive.

To meet this challenge, Stellantis has come up with a radical solution: reduce dependence on external suppliers. The Group currently works with renowned subcontractors such as Valeo, Continental, Magna International and Forvia. However, Carlos Tavares believes that in-house production of certain parts could not only improve margins, but also accelerate development times.

"We've come to the conclusion that what we outsource, we can do in-house".said Tavares. This strategy would improve margins and facilitate the transition to electrification. As a reminder, Stellantis' objective, if maintained, is ambitious: to sell 5 million 100 % electric cars a year by 2030, and to offer 75 fully electric models by that date.

However, this transition to in-house production will not be immediate. It will require new plants and the hiring of many new employees. In parallel, Stellantis recently suspended construction of new battery plants in Germany and Italya project initially developed in collaboration with Mercedes to create a "battery Airbus". This decision illustrates the difficulties inherent in in-house production.

A bluff or real pressure on suppliers?

In this context, Stellantis suppliers are feeling the pressure to reduce their costs. The European market for electric vehicles is currently marked by falling demand and declining subsidies, while Chinese brands are offering cheaper models.

Despite these announcements, it should be noted that Stellantis has increased the number of its suppliers in recent years, from 2,561 to 3,461 between 2021 and 2023, and its purchases from these suppliers rose from 82 billion to 104 billion euros over the same period.

Is this re-internalisation strategy a means of putting pressure on suppliers, or a genuine strategic direction for the future? Only time will tell.