Stellantis to Invest $35.5 Billion in EVs

Stellantis to Open Battery Plants

Stellantis (STLA), a car company born out of the merger between Fiat Chrysler (FCAU) and PSA (PSA), is pouring $35.5 billion into electric vehicles and the software behind them in an effort to become a leader in the burgeoning marketplace. The vehicle maker has set an aggressive goal to spend the money by 2025.

Part of the investment will go to create five battery plants in the US and Europe with an eye toward driving down battery costs. Batteries are one of the most expensive components of electric vehicles, and analysts are expecting battery shortages in the coming years. Vehicle makers including Ford (F) and Hyundai (HYMTF) are investing billions of dollars to shore up their battery production.

Stellantis’ Commitment to EVs

Stellantis is electrifying all 14 of its brands including Jeep, Ram, and Peuegot, giving them battery ranges of 300 to 500 miles. By 2030 the company expects 70% of its European sales to come from EVs while 35% of its US sales will be from electric cars, trucks, and jeeps.

Those targets are among the more ambitious ones in the vehicle industry. Some analysts question the company’s ability to meet them, given that Stellantis has been slower than rivals to embrace and invest in electric vehicles so far. The company wants to overcome that perception and make a statement about its commitment to EVs.

Tough Competition Abounds

Stellantis is betting that the merged company has the scale and resources necessary to compete in the electric vehicle market, which is already crowded. The company expects to realize $6 billion in annual savings from the merger which it will use for its plug-in and battery efforts. In addition to Ford and Hyundai, Stellantis has to contend with Tesla (TSLA), General Motors (GM), and startups like Rivian. That will require a significant amount of resources.

Stellantis needs to show investors its goals are achievable by rolling out a lineup of EVs that match the timeline of its rivals. It will be interesting to see if the company’s big plans will come to fruition.

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