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Stellantis CEO Carlos Tavares speaks during an event in Hangzhou, China, on May 14.-/Getty Images

The transition to electric vehicles (EVs) would impose a “significant burden” on auto suppliers, Stellantis STLA-N CEO Carlos Tavares said on Wednesday as Western automakers race to cut costs and compete with Chinese peers.

Tavares said the challenge for automakers was to sell EVs, whose production costs are 40 per cent to 50 per cent higher, at the same price as equivalent petrol models. This forces them to cut costs at every level of their operations, including supply chains and logistics.

“You are going to see a huge shift of the supplier base. The sourcing will move from the Western world to the best cost countries,” he said during the Bernstein Strategic Decisions conference.

“The EV race has become a cost cutting race,” he added.

Tavares, the head of a company whose brands include Fiat and Peugeot, said the EV transition was being held back by affordability, with customers reluctant to buy expensive EVs unless supported by governments through incentives.

“The Western world consumer is telling the Western world government, okay, there is the global warming issue, fine, but if you don’t help me, I will not help you,” he said.

Stellantis would continue to bet on multi-energy platforms – those created for EVs but that can also underpin hybrid electric-petrol vehicles – to retain flexibility in its ranges.

“Today multi-energy is good to face uncertainty,” Tavares said.

In an effort towards make cars more affordable, the Franco-Italian group would soon launch a Jeep model in the U.S. costing less than $25,000, following its 20,000 euro ($21,600) Citroen e-C3 EV in Europe.

Stellantis also has a joint-venture with Leapmotor , which will allow it to sell the T03 model of its Chinese partner for less than 20,000 euros in Europe.

Asked about potential M&A deals, Tavares said his main goal was to keep Stellantis in strong business shape.

“If an opportunity comes, we will of course consider it, but we have to be fit at the moment where that opportunity is passing by,” he said.

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