Stellantis And Volkswagen Are Off To A Slow Start

After the EV king, Tesla Inc TSLA reported its biggest revenue drop since 2012, along with a sinking profit, Stellantis N.V. STLA and Volkswagen AG VWAGY followed by reporting disappointing first quarter financials that reflected lower sales and higher costs. Plummeting sales and profit made the once-all-mighty Tesla promise more affordable EVs are coming early next year, if not later this year. Despite a slow start of the year, both Stellantis and Volkswagen have maintained their full year targets.

Despite disappointing Q1 results, Stellantis is betting on its new products portfolio.

For the January-March quarter, Stellantis reported revenue contracted 12% to 41.7 billion euros, which adds up to about $44.6 billion. Stellantis’ results were weighed down by lower volumes, along with an unfavourable product mix and foreign exchange dynamics, with the European region performing worse than expected, in terms of volume, price and product mix. Moreover, shipments in North America, Stellantis’ largest market also contracted 20%.

EV unit sales rose 8%, but consolidated shipments overall dropped 10% to 1.335 million units.

CFO Natalie Knight attributed the drop in shipments and revenues to the transition to the group's new product portfolio which will be based on new platforms. To prepare, Stellantis was reducing inventories to reinforce its strong relative pricing ahead of its new or mid-cycle product launches, including RAM 1500 truck that is out already, and will be followed by low-cost EV Citroen eC3, Peugeot E3008 EV SUV and Jeep's Wagoneer S. Stellantis plans to launch25 new models this year, out which 18 are EVs. Stellantis is quite confident about its new lineup as it reiterated its full year guidance that includes double-digit margin on adjusted operating income, and a positive industrial free cash flow.

Despite a slump in profit, Volkswagen confidently maintained its full year targets.

Due to weaker demand for its premium brands that triggered a drop in sales, Volkswagen reported its profit plummeted 20%. For the first three months of the year, Volkswagen reported an operating profit of 4.6 billion euros or $4.9 billion, as it was also hit by “an unfavourable country, brand and model mix”, along with higher fixed costs.

Vehicle sales dropped 2% to 2.1 million units. But, Volkswagen also reiterated 2024 financial targets that include a revenue rise of 5%, along with a full-year operating margin in the range between 7% and 7.5%.

2024 had a slow start, but that does not mean new adventures are not on the horizon.

Tesla bought some time by deciding to bring back affordable EVs on the menu. The EV slowdown is the new reality that even Tesla has to face, and innovation seems to be the key in navigating these challenging times. Things are even harder for traditional automakers who are undergoing their biggest-ever transformation. Fortunately, there are also smaller players who are helping uplevel the EV game with their innovative intellectual property, such as Worksport Ltd WKSP. Worksport is bringing the world’s first solar-powered truck bed cover this summer. With its unapparelled power duo, the SOLIS solar-powered tonneau cover and COR, a portable battery system that can be used independently and without a pickup truck, Worksport is promising much more than just to ease the EV range anxiety. Worksport is promising off-grid power on the go which has the potential to revolutionize outdoor experiences and lifestyles, from camping to powering remote job locations and providing power during emergency and disaster efforts.

Therefore, just because 2024 wasn’t off to a good start does not mean there aren’t good news on the horizon. After all, the EV market continues to grow, the slowdown just means it is doing it at a slower pace, but the EV revolution is not showing any signs of stopping.

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