Chrysler parent Stellantis NV STLA CEO Carlos Tavares on Friday advised against price reductions that might risk profitability and potentially make car manufacturers acquisition targets.
What Happened: Stellantis is relatively more protected from the downtrend in prices as compared to several other rivals, Tavares said, as reported by Reuters. The CEO also noted that several other automakers were ‘in trouble’ owing to price cuts with building losses.
“If you go and cut pricing disregarding the reality of your costs, you will have a bloodbath. I am trying to avoid a race to the bottom,” Tavares said as per the report. “I know a company that has brutally cut pricing and their profitability has brutally collapsed.”
The CEO did not, however, take names.
Why It Matters: Automakers have been cutting prices on their vehicles, particularly EVs, in light of strong competition and concerns about affordability impacting demand amidst high interest rates.
Only recently, Tesla Inc TSLA cut prices on its best-selling SUV Model Y in China and Europe. For Tesla, the price cut comes as it faces increased competition in the Chinese EV market, particularly from Warren Buffett-backed BYD Co Ltd BYDDY BYDDF.
In the last quarter, BYD trumped Tesla as the world’s largest EV maker, selling more pure electric vehicles than Tesla.
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Stellantis Photo by Jonathan Weiss on Shutterstock
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