Stellantis (STLA) is finding a unique way to navigate the messy world of electric vehicle (EV) tariffs. Formed in 2021 through the merger of Fiat Chrysler Automobiles and PSA Group, Stellantis is now the world’s fourth-largest automaker. Its CEO, Carlos Tavares, recently called tariffs a “trap” at a Reuters event, criticizing them for sheltering legacy automakers and hurting competition. In an effort to sidestep these restrictions, Stellantis is leaning on a partnership with Chinese EV maker Leapmotor, which Tavares believes will help the automaker stay competitive globally. “The best way to compete is to try to be Chinese ourselves,” he said, indicating Stellantis’ intention to adopt China’s low-cost approach.
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Stellantis Expands Leapmotor’s EVs to Europe and U.S.
Stellantis’ joint venture with Leapmotor allows it access to Chinese EV technology and rights to produce Leapmotor vehicles outside of China. Stellantis is already producing Leapmotor EVs in Poland, alongside other models like Fiat and Alfa Romeo. Tavares mentioned that the company could make these EVs in North America, although there’s a catch. The U.S. government has implemented heavy tariffs on Chinese-made EVs, making it a challenge to apply the same strategy on both sides of the Atlantic, according to Reuters.
Competing in a Politically Divided Market
The political scene is also a big hurdle for Stellantis. With U.S. restrictions on Chinese EVs tightening, producing Leapmotor vehicles in North America might not save as much money as anticipated. European automakers like BMW argue that cutting ties with China will hurt the EU’s green goals. Meanwhile, U.S. automakers, including Ford, see tariffs as a way to level the playing field with China’s cheaper EVs. Despite these challenges, Stellantis remains committed to achieving its electrification targets of 100% EV sales in Europe and 50% in the U.S. by 2030.
Looking at the TipRanks Risk Analysis tool for Stellantis, we can see that political risks contribute 11% to the overall risks.
Is Stellantis a Buy, Sell or Hold?
Analysts remain cautiously optimistic about STLA stock, with a Moderate Buy consensus rating based on nine Buys, seven Holds, and two Sells. Over the past year, STLA has decreased by more than 10%, and the average STLA price target of $22.17 implies an upside potential of 45.4% from current levels.
