Stellantis Increasing Production of Electric Drive Modules to Support Growth in Electrification Portfolio
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Insights
Stellantis' strategic investment in the production of electric drive modules (EDMs) at the Szentgotthard plant in Hungary signals a robust commitment to the electrification of its automotive lineup. This expansion, part of a broader €103 million investment, is a clear indicator of the company's adaptation to the evolving automotive market, where demand for electric vehicles (EVs) is rapidly increasing. The automotive industry is undergoing a significant transformation, with electrification at the forefront. Investments in EV technology are critical for traditional automakers to remain competitive against pure-play EV manufacturers.
Stellantis' focus on the production of EDMs, which are integral to electric vehicle powertrains, highlights the shift in manufacturing priorities. The EDMs combine the electric motor, reduction gearset and inverter into a single unit, which is a streamlined approach that can lead to cost efficiencies and performance improvements. The ability to produce these modules in-house provides Stellantis with greater control over its supply chain, which is particularly important given the current global semiconductor shortage that has affected many automakers.
The investment in Hungary, supported by government grants and contributions, also underscores the importance of regional partnerships in the automotive sector. Such collaborations can lead to financial incentives and a supportive political environment, both of which are beneficial for long-term investment strategies. Additionally, the upskilling of employees to meet the new production requirements is a positive step towards workforce development, ensuring that the existing workforce can transition to the new technology.
The financial implications of Stellantis' investment in its electrification portfolio are multifaceted. The €103 million investment in the Hungarian plant, coupled with the broader €50 billion earmarked for electrification over the next decade, underscores the company's long-term financial commitment to transitioning away from internal combustion engines (ICEs). This move is likely aimed at future-proofing the business against increasingly stringent emissions regulations and shifting consumer preferences.
For investors, the capital outlay into EDM production is indicative of Stellantis' strategic positioning within the EV market. The company's goal of achieving a 100% passenger car battery electric vehicle (BEV) sales mix in Europe and a 50% mix in the United States by 2030 could lead to increased market share in the EV segment if successfully executed. However, investors should be aware of the risks associated with such a large-scale transformation, including potential execution challenges and the need for substantial R&D expenditure to keep pace with technological advancements and competitors.
The announcement also has potential implications for the stock market, as it may affect investor sentiment regarding Stellantis' growth prospects and its ability to meet future revenue targets. Positive market reception to this news could lead to an uptick in stock value, reflecting confidence in the company's strategic direction. Conversely, any signs of delays or setbacks in the electrification plan could negatively impact stock performance.
The automotive industry is at a pivotal point, with electrification being one of the most significant trends shaping its future. Stellantis' investment in EDM production is a strategic move that aligns with industry-wide efforts to reduce carbon emissions and meet global climate goals. The focus on the STLA platform, which is BEV-centric, indicates that Stellantis is preparing its product lineup to be competitive in an increasingly electric-dominated market.
The integration of electric drive modules into the Szentgotthard plant's production capabilities is a testament to the company's agility in repurposing existing facilities for new technologies. This approach can reduce the time and cost associated with building new infrastructure from scratch. The Szentgotthard plant's transition from manufacturing traditional ICEs to EDMs is also reflective of the broader industry shift from fossil fuels to electric power.
Moreover, Stellantis' commitment to becoming a carbon net-zero corporation by 2038 shows an understanding of the environmental responsibilities incumbent upon major players in the automotive sector. This target aligns with global efforts to combat climate change and may provide Stellantis with a competitive edge in markets where sustainability is becoming increasingly important to consumers.
Stellantis Increasing Production of Electric Drive Modules to Support Growth in Electrification Portfolio
- Stellantis is growing its electrified propulsion manufacturing footprint with EDM production in Tremery-Metz, France, Kokomo, Indiana, USA and Szentgotthard, Hungary; along with electrified dual-clutch transmissions (eDCTs) at Mirafiori complex, Italy
- Addition of Szentgotthard plant in Hungary with a
€103 million investment supports the ongoing transformation of the Company’s manufacturing sites to achieve core electrification objectives of the Dare Forward 2030 strategic plan
AMSTERDAM, February 12, 2024 – Stellantis N.V. today announced it intends to increase production capacity of electric drive modules (EDMs) by adding production in Szentgotthard, Hungary, targeted to begin in late 2026.
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“Bringing production of electric drive modules to Szentgotthard to support our transformation towards electrification is another important part of our goal to provide customers with clean, safe and affordable mobility,” said Arnaud Deboeuf, Stellantis Chief Manufacturing Officer. “The people at this plant can be proud that their work will be an integral part of our electrified future and a core element of delivering customer-focused, class-leading electrified vehicles from our iconic brands.”
“This investment means that Hungary will have a stronger role in helping the automotive industry make its electrification transition,” said Minister Péter Szijjártó. “Now, traditional propulsion will be manufactured next to electric drive module production. With this investment, we are protecting jobs and ensuring the future of the Szentgotthárd plant.”
Szentgotthard-produced EDMs will be used in vehicles built on an upcoming BEV-centric STLA platform. Production of EDMs will be housed in existing buildings at the plant. New work related to electric drive production at the plant will include machining of certain key components and final assembly and testing of 3-in-1 EDMs that combine the electric motor, reduction gearset and inverter into a single unit.
The Szentgotthard plant currently builds 1.2-liter turbocharged three-cylinder and 1.6-liter four-cylinder internal combustion engines used in a variety of Stellantis brand vehicles. Stellantis employees will undergo upskilling training to support the machining and assembly requirements of EDM production.
Stellantis is investing more than
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About Stellantis
Stellantis N.V. (NYSE: STLA / Euronext Milan: STLAM / Euronext Paris: STLAP) is one of the world’s leading automakers aiming to provide clean, safe and affordable freedom of mobility to all. It’s best known for its unique portfolio of iconic and innovative brands including Abarth, Alfa Romeo, Chrysler, Citroën, Dodge, DS Automobiles, Fiat, Jeep®, Lancia, Maserati, Opel, Peugeot, Ram, Vauxhall, Free2move and Leasys. Stellantis is executing its Dare Forward 2030, a bold strategic plan that paves the way to achieve the ambitious target of becoming a carbon net zero mobility tech company by 2038, while creating added value for all stakeholders. For more information, visit www.stellantis.com
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| For more information, contact: Fernão SILVEIRA +31 6 43 25 43 41 – fernao.silveira@stellantis.com Nathalie ROUSSEL +33 6 87 77 41 82 – nathalie.roussel@stellantis.com communications@stellantis.com www.stellantis.com | ||||||||
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FAQ
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