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Carmaker bets on hybrid models to make electrification accessible to the middle class

03/07/2024


Carlos Tavares — Foto: Wenderson Araujo/Valor

Carlos Tavares — Foto: Wenderson Araujo/Valor

Stellantis CEO Carlos Tavares concluded that offering only fully electric cars worldwide would make the industry lose most of its customers, who are in the middle class. Therefore, while sticking to decarbonization goals, he has been seeking alternatives to offer a more accessible electrification to that type of consumer. In Brazil, the possibility of using ethanol in hybrid cars led the automaker to decide to invest R$30 billion in the country over the next five years.

That is the largest investment program among all plans announced by automakers in recent weeks. With the Stellantis plan, the total amount announced by light vehicle manufacturers (cars and light commercial vehicles) in Brazil for the current decade reaches R$87.8 billion. Of the total, R$67.2 billion were announced less than three months ago.

The investments announced by Stellantis—a company created three years ago from the combination of Fiat, Chrysler, Peugeot, Citroën, and others—add to the plans by Volkswagen, Toyota, and CAOA Chery, which have expressed that their new investments will back the development of hybrid ethanol cars. General Motors, Renault, Nissan, and Hyundai are expected to follow suit, which Mr. Tavares described as “a smart solution.”

The executive points out that producing a fully electric car today costs between 30% and 40% more. “If we pass this cost on [to consumers], the middle class will say, ‘I can’t buy it,’” he said. “If we ignore the cost, restructuring a company that employs 260,000 people worldwide would be a social disaster,” he added.

Hence, there is a need to seek regional solutions, according to Mr. Tavares. “We have smart solutions like Brazil’s bi-fuel car,” he said. The bi-fuel technology, which allows for the use of ethanol or gasoline, combined with the electrification offered by a hybrid car, contributes to promoting decarbonization at more affordable prices.

“We are witnessing the fragmentation of the world, which is not a good solution for humanity; but that is another story,” he said. The Portuguese executive has led Stellantis from the start. Before that, as the CEO of Peugeot and Citroën, he was already one of the most respected leaders in the industry.

He points out that while Europeans are interested in EVs, Americans are still hesitant. In Brazil, there is the possibility of ethanol. How about the Africans? “How can we find a safe, clean, accessible technology for Africans without turning to biofuels that could compromise food supply?” he questions.

According to the executive, the prices of electric cars could be on par with combustion models from 2026 or 2027. However, he fears that a regionalization of the world could compromise the necessary scale for that to happen.

Mr. Tavares cites what happened recently in Europe, when some governments, including Germany, eliminated subsidies of up to €7,000 for consumers who exchanged their cars for a fully electric model. “The middle class gave up.”

“The consumers’ message was: we can have electric cars, but we need subsidies. Without subsidies there is no volume, without volume, there is no scale, and without scale, we cannot reduce prices. And without volume, there will be no environmental impact. It’s a jammed machine.” The executive notes that countries are indebted and facing high interest rates, and no one wants to hear about tax increases.

But what is the point of offering a hybrid model that runs on ethanol if consumers prefer gasoline? Mr. Tavares says Stellantis already offers cars that run exclusively on ethanol. “But we are just one of the players to make it work.” He suggests greater government participation to promote the biofuel.

Argentina will also receive investments from Stellantis. The amount to be invested in Argentina was not expected to be revealed in the press conference held by the executives on Wednesday (6) in Brasília, shortly after the meeting with the government. However, given the journalists’ insistence in discovering the level of interest the company has in keeping the activities’ pace in the neighboring country, Emanuele Cappellano, CEO of Stellantis Latin America, said Argentina will soon receive investments amounting to R$2 billion.

According to Mr. Cappellano, by 2030, the renewal of products and launch of new cars under Stellantis brands in Brazil will total 40 models. Of this total, 20% will be fully electric cars.

Mr. Tavares came to Brazil to announce the new investment to the government in person. Both during the meeting with President Lula and Vice President Geraldo Alckmin, and later, in the interview with journalists, the executive praised the Mover program, which offers federal tax incentives to the automotive industry in exchange for the commitment to carrying out research, innovation, and reducing emissions.

“It is a very smart program and one of the strengths of the country, which has carried out structural reforms and programs for the industry,” he said.

“Latin America is, for us, a stable region today,” Mr. Tavares said when commenting on the reasons that led the company to announce the robust investment. The previous cycle combining the programs of the brands under Stellantis in Brazil totaled R$16 billion for the 2018-2025 period.

The reporter’s travel costs were covered by Stellantis.

*Por Marli Olmos — Brasília

Source: Valor International

https://valorinternational.globo.com/

One of the goals is to develop hybrid cars and develop local sourcing of parts

07/07/2022


Antonio Filosa — Foto: Alexandre Campbell / Valor

Antonio Filosa — Foto: Alexandre Campbell / Valor

Stellantis’s procurement team in Brazil has had a lot of work lately. The automaker corporation that unites Fiat, Chrysler, Peugeot and Citroën needs to advance in negotiations with suppliers to meet two priorities defined by the company’s CEO in Latin America, Antonio Filosa. One part of the conversation involves development projects for the production of hybrid cars in Brazil. The other seeks to increase the local sourcing of parts, especially electronic components, to reduce dependence on foreign countries, especially in Asia.

Mr. Filosa, one of the greatest advocates of Brazil using its knowledge of ethanol to produce hybrid cars, does not reveal dates. But he said that the process of developing new versions of the so-called powertrain of the brand’s cars will begin in Betim (Minas Gerais state), where the company currently has an important production center for combustion engines.

According to Mr. Filosa, Stellantis has engineering and product development teams around the world that are currently working to find solutions to reach the company’s goal of reducing CO2 emissions by 50% by 2030. The Brazilian team was assigned the mission of developing the ethanol hybrid. “We are the only ones in the world capable of developing this technology,” he says.

Stellantis’s position clashes with that of General Motors, which, according to Santiago Chamorro, CEO for South America, in an interview with Valor this week, said he intends to offer in the Brazilian market only 100% electric cars, which depend on charging at charge points. The hybrid, on the other hand, has two engines – a combustion one that helps charge the other, electric – and, therefore, dispenses the batteries charging in electric power sources.

“We will offer the customer whatever he wants, including 100% electric cars. But we will have, locally, the electrification with ethanol, a clean solution since the sugar cane plantation. This is Brazil’s chance to electrify its vehicles without damaging the industry,” Mr. Filosa said. For now, all 100% electric cars are imported.

Stellantis’ goal is to reach 2030 with electric cars in 100% of sales in Europe, 50% in the United States, and 20% in Brazil.

For Mr. Filosa, ethanol “is a very Brazilian answer,” on the transportation side, to the decarbonization process. The rest, he says, is possible through reforestation. “These are simple solutions. We already have ethanol for cars and reforesting a country where it rains a lot is easy. Here is not Dubai,” he affirms.

Stellantis’s second move in negotiations with suppliers has two more fronts. In one of them, it seeks to reduce dependence on imported parts. In recent times, the automotive industry has had to face supply problems due to several factors, ranging from the strong recovery in global demand that followed the peak of the pandemic, to the war in Ukraine, followed later by the lockdowns in China.

Without naming, Mr. Filosa says that a new Asian supplier has already started to manufacture in Manaus components for the navigation and entertainment system of the cars produced by the automaker in the country.

Along the same lines as the expansion of domestic production, Stellantis’s management seeks to attract more suppliers to its plants, especially the one in Goiana, Pernambuco, which currently has 30 suppliers in the surrounding area. By 2025, the company that a year and a half ago became a super-automaker, with the global merger of several brands, has become the leader of the Brazilian market, with 33.6% of sales of cars and light commercial vehicles in the first half of the year. In Brazil alone, the company has three industrial complexes and an engine plant.

“Brazil needs to industrialize more and more to guarantee work and income. If today 65% of the market is in the Southeast and South regions, it is not because consumers in the North and Northeast don’t want or don’t need cars. It is because of the lack of income,” the executive said. For him, industrial decentralization also helps to improve the country’s social indicators, such as education and security.

About the restrictions on the foreign exchange market in Argentina, where Stellantis has two vehicle plants, Mr. Filosa, who was once Fiat’s CEO in Argentina, says the company is analyzing the situation “to understand the impacts.” “We don’t expect, of course, that there will be zero impact,” he says.

Regarding the Brazilian market, the executive says that the pressure of inflation and the high-interest rates worry. But this, he highlights, does not show up in sales yet because the lack of components is a major problem. “For now, the crisis is of supply.” Therefore, for him, the market this year tends not to present growth compared to 2021.

*By Marli Olmos — São Paulo

Source: Valor International

https://valorinternational.globo.com/
Juliana Coelho — Foto: Divulgação/Andrea Rego Barros
Juliana Coelho — Foto: Divulgação/Andrea Rego Barros

As a child, Juliana Coelho liked numbers. For this reason, she decided to study engineering. She chose a specialization in chemistry because she knew that an engineer’s chances of launching a career in the state of Pernambuco were limited to the petrochemical complex. But when she reached the end of her penultimate year of college, in 2010, a new event emerged, which would later diversify the region’s economic activity and completely change the professional trajectory imagined by the young woman. In December of that year, Fiat announced the construction of a factory in Pernambuco.

Today, the 32-year-old engineer is traveling through Europe to visit some of the 92 factories that make up Stellantis, a company that was born a year ago from the merger between the brands of the Fiat, Chrysler, Peugeot, and Citroën groups. Ms. Coelho just took over one of the most important positions in the manufacturing area of the new super automaker. She is the new world head of the so-called Stellantis production way, which will extract the best from the methods that each of these brands has developed to manufacture vehicles throughout centuries-old histories.

The executive is in Paris and had just finished a French class (a language she is learning during her trip) when she gave an online interview to Valor. The French capital could be one of the alternatives for the new address of the engineer born in Olinda. She is still studying the best housing location for her and her husband, a fitness trainer also from Pernambuco, to whom she has been married for two and a half years.

Europe tends to be a strategic point both for traveling between the assembly lines spread across the continents and for the proximity to the company’s global management, which is currently working intensively to fine-tune the synergies between the brands. The housing issue does not seem to concern her at a time when the pandemic has taught us lessons about, as she cites, working in the “nowhere office”.

Nine years have passed since the engineer, then recently graduated from the Catholic University of Pernambuco, was selected as a trainee to work at the factory that Fiat was starting to build in Goiana, 64 kilometers from Recife and a little less from Olinda. In the last three years, her professional career took a turn, in parallel with the revolution that involved the company that hired her.

In 2018, Fiat announced the acquisition of Chrysler. With the union, Goiana, a city selected by the Italians after the federal government extended tax incentives in the Northeast and Central-West regions, would be chosen to house a modern factory of the Jeep line. And more recently, the union with Peugeot gave rise to Stellantis.

Aware of the dream that her granddaughter began to cherish since it became known that an automaker would go to Pernambuco, Miriam, maternal grandmother of the recent graduate, kept an eye on the news widely publicized in the local press about hiring. “Looks like they’ve already called a group. Are you not on the list?” Yes, she was. She and 39 other newly graduated engineers formed the first group of trainees at the first vehicle factory in Pernambuco.

But there was no factory to train in the immense land, where there was once a sugarcane plantation, which was turned into a construction site when the engineers arrived. The trainee group was then sent to Italy and Serbia to learn in the factories there. The dream of the young woman who always liked cars came true. The interest in automobiles arose because an uncle had a rental company and offered the fleet for relatives to ride. In the Coelho family, there are no other engineers. Her father, now deceased, worked in administration. Her mother is a physical therapist. One of the two brothers – both younger than her – is studying business administration in Portugal and the other, a nutritionist, lives in Olinda.

Upon returning from the European factories, Ms. Coelho was ready to start work. Her training in chemistry directed her to the area of car painting. She started in the technical area. But curiosity, willingness to learn, and also to pass on lessons learned ended up involving her in the area of hiring personnel. Naturally, she became an area leader and a supervisor.

At that moment, she began to realize that other Pernambuco workers, candidates who, like her, would have their first job in a factory there, and that none, like her, knew what it was like to produce cars, could learn quickly. “Opportunities can arise not only for those who have experience, but for those who are willing to learn”, she highlights.

Those who knocked on Fiat’s door came from very different backgrounds. They were shellfish gatherers, fishermen, sugar-cane cutters. And, among them, some even with skills that, curiously, are useful in an automaker. Ms. Coelho cites the example of those who had already worked as artisans. “Just like in crafts, controlling the seals of a bodywork also requires skill with the hands”, she says.

Over time, the Goiana factory needed to be expanded. At the same time, Ms. Coelho was building an ascending career in the company. From painting, where she rose to the position of supervisor, she moved on to the assembly line, where she took over management four years after she started working for the company. With the industrial expansion, the engineer also continued to be involved in people management, the hiring process and, as she says, “learning and passing on” acquired knowledge.

In March 2018, the company where Ms. Coelho works, which at the time was just Fiat Chrysler, announced that the Goiana plant would start operating 24 hours a day, with three production shifts. The news was received with celebration, with the presence of the then-president Michel Temer, who brought the company even better news: the extension, for five years, of the special tax regime for factories in the automotive sector installed in the Northeast region. The benefit had already been extended in 2009.

Since then, the controversy that has always existed around tax incentives for automakers in the North, Northeast, and Central-West regions has intensified. Companies with factories outside these regions have bolstered lobbying with politicians, with complaints that they would lose out in competition with companies enjoying tax breaks. On the other hand, the groups installed in these regions have always argued the need for incentives to offset the cost of logistics that involves transporting parts from the South and Southeast and, on the other hand, cars ready for these markets.

Ms. Coelho defends ways to guarantee development for these regions. She says that other countries stimulate, through incentives, regions where the industry is not so present. “Decentralization is fundamental. We need to get rid of the geographic map that boils down to three or four states,” she highlights.

“See what that factory was (in Goiana) and what it will be; it is necessary to invest not only where there is already development,” says the engineer who declares – and in fact, proves – to be very calm. The new professional challenge has taken more time, which she finds natural. “At work, I tend to do my best,” she says. But, in general, the executive manages to balance professional and personal life. “On Sundays, I usually go to my grandmother’s house, stay with my husband and the whole family, go to church.”

The first experience away from home, from her grandmother, mother, brother, and Olinda, was in November 2018. Ms. Coelho was transferred to Betim, in the state of Minas Gerais, to assume the position of chief engineer for Fiat Chrysler manufacturing throughout Latin America. She and her husband moved to Belo Horizonte, where they lived until July 2020. The new position helped her not only see the cars produced but the entire company.

A new promotion, however, took her back to her homeland. Ms. Coelho was assigned to direct the entire factory, which at that time was practically the same size as it is today, with 13,500 employees and 16 suppliers within the industrial park. She was the first woman to assume this role in the company.

But, when she arrived, there was no one. It was at the beginning of the pandemic. A period when virtually all automakers had laid off employees, who would only return to work after companies organized factories to ensure distancing and safeguard measures to prevent the spread of Covid-19.

Of course, she already knew she wouldn’t find workers. But, after seven years of direct work on assembly lines, the feeling of emptiness was unsettling. However, the pandemic also left good lessons for those who always live in the crowd. “We learn to connect with people, to listen to them in a moment of learning and a lot of responsibility. It is in difficult times that we see the qualities of people.”

A little over two months ago, she began to undergo discreet interviews at the company. Questions suggested that she was undergoing a secret selection. “I imagined that all of that was for a new job opportunity at the company, but I wasn’t sure what it was”, she says. She does not know which or how many candidates were in the running. Upon being asked to take charge of Stellantis’s new production system, she understood why she had been interviewed.

Each of the automaker’s brands has, over decades, developed its own means of producing vehicles. From the best each one offers, Stellantis’ own model will be built. The Brazilian executive will lead this process, which also involves the synergies the company’s global management has pursued since the first day of the company’s creation. In her new position, Ms. Coelho says she will always be very close to the group’s factories around the world, establishing a new methodology based on the application of the best methods adopted until today by the two groups.

Stellantis’ global meetings are usually conducted in English, a language she speaks. But in conversations with Carlos Tavares, the company’s global CEO, she will always have the chance to practice her native language. Mr. Tavares was born in Portugal.

Being part of the improvement of gender diversity in an industry that has historically been an essentially male environment is something that delights the engineer. She says she has never felt prejudice. She believes that it is necessary to encourage women to work in sectors where, sometimes, they themselves do not believe they will adapt. “This opportunity is fantastic; the diverse, the portrait of society, already appears in our meetings”, she says.

Ms. Coelho is also interested in monitoring studies and research that point out global trends in mobility. She recognizes that a lot has changed since owning a car was one of the most important achievements for a young person. Even so, she believes that interest in cars persists and will continue. On this trip to France, the changes in mobility and the offer of means of transport, in Paris especially, caught her attention. But, not for that reason, to her delight, the cars lost prominence. “In Paris, you take a car if you want and the city is still full of them,” she says.

For her, “the plurality of mobility”, on the other hand, gains importance. This is the case, for example, of the shared use of vehicles, as a service. “People will continue to like the cars, even if not just through owning them,” she says. What matters in this context, she says, is that the industry continues to pursue environmental goals. “The zero-carbon challenge is fundamental”, she emphasizes.

The return of the new Stellantis global executive to Brazil is scheduled for next Monday. This time, probably for a little while. The new role will certainly require continental travel. But Olinda and Goiana will remain there, as witnesses that the automobile industry can always be surprised to find hidden talents in lands where until a few years ago no one knew how to manufacture a car.

Source: Valor international

https://valorinternational.globo.com/