A Fiat Of Strength

Image source: midjourney ai and solomon7 - Shutterstock

What's going on?

Carmaker Stellantis reported a beefed-up, record annual profit on Wednesday.

What does this mean?

The name “Stellantis” may not ring a bell for most folks, but mentioning a few of the auto giant’s car brands – like Chrysler, Fiat, and Peugeot – will spark a glimmer of recognition in almost anyone’s eyes. And these days, it’ll have investors’ eyes lighting up too. See, while chip shortages hit carmakers worldwide, Stellantis kept its cool, focusing on marketing and on making pricier models instead. And that did the trick: the number of cars Stellantis sold fell by 2%, but revenue still managed to leap up by 18%. That brought profitability to new heights in every market the firm operates in, raking in a record net profit of $18 billion. After that performance, a reward was clearly in order – so Stellantis gave its stock a boost with the announcement of a sizable share buyback program and dividend payout.

Why should I care?

The bigger picture: Low battery.
Stellantis got a welcome jolt from its European EV strategy, with global EV sales revving up by 41%. And it’s aiming high for the future too, planning to double its electric offerings by the end of next year. Thing is, though, dreams like that are on a collision course with one big roadblock: the world’s paltry charging infrastructure. Take Europe: a McKinsey study shows the region’s setting up charging stations at a snail’s pace, meaning it will need to increase 2021’s installation numbers sixfold by 2030 to meet demand.

Zooming out: The biggest loser.
Holding onto last year’s fat margins could be a challenge for Stellantis, especially with Tesla and Ford engaging in a cut-throat price war. Tesla – the original EV giant – made especially drastic cuts, leaving the Model 3 at the cheapest it’s ever been compared to the typical American car. So if Stellantis wants to compete, it might have to cut prices and improve its efficiency to protect margins.

Originally posted as part of the Finimize daily email.

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