Head of auto parts sector warns Stellantis against outsourcing supply and Stellantis AI and machine learning executive latest to depart automaker
Flavio Volpe, president of the Automotive Parts Manufacturers' Association speaks on Wednesday, June 19, 2024 at the University of Windsor's Ed Lumley Centre for Engineering Innovation. PHOTO BY DAN JANISSE /Windsor Star
Automotive Parts Manufacturers’ Association president Flavio Volpe feels Stellantis’s goal to achieve double-digit savings in its supply chain by sourcing from best-cost countries is setting up a struggle that promises to be as much political as it is economic.
The company expects to generate 80 per cent of its desired savings by shifting to suppliers in best-cost countries by 2028 or bringing more production back in-house.
“If you supply Stellantis, you know none of this is a surprise,” said Volpe, who was the keynote speaker at the University of Windsor’s Faculty of Engineering open house Wednesday. “These are very tough conversations right now.
“What we’re trying to say on behalf of suppliers and some of the suppliers are saying is ‘You can’t squeeze blood from a stone.’
“At some point, you have to realize you’ve hit the back wall and look for savings in other ways or look at your product mix or do what everyone else does, lobby government to make sure the product mix matches your strengths.
“We’re working with them, but when (Stellantis CEO Carlos Tavares) says they’re the most unpopular (OEM) with (suppliers), I’ve heard that a lot.”
Volpe said the transition to electric vehicles was never going to be as linear as governments or the automakers wanted or expected it to be. The lingering price disparity between EVs and their traditional internal combustion engine predecessors; growing competition from Chinese automakers; and consumer hesitancy at making the switch is resulting in automakers pushing their economic pain down the supply chain.
University of Windsor engineering students Milad Moradi, left, and Ehsan Hallaji set up a working model designed to study cyber security on autonomous vehicles during an open house at the Ed Lumley Centre for Engineering Innovation on Wednesday, June 19, 2024. PHOTO BY DAN JANISSE /Windsor Star
However, Volpe said Stellantis’s solution is likely to get them sucked into the political quagmire on both sides of the Atlantic Ocean.
“South of the border it (electric vehicles) has become completely politicized,” Volpe said.
“What he (Tavares) is saying does not reconcile with the heads of government in the countries he operates in and in the country in which he’s domiciled (The Netherlands) and the countries he’s invested in are saying.
“They’re saying, ‘We’re forming an alliance based on our values to defend against the low-cost predatory tactics of China and if you think you’re going to chase cost savings in some of those regions you should look at what our tariff and quota strategies will be.’
“It’s just another indication of how tumultuous the next few years will be.”
A lot of suppliers will fail in the process
Volpe, who was part of the negotiating team for Canada that achieved the USMCA trade agreement, said its clear North American governments are insistent on localizing content.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association speaks on Wednesday, June 19, 2024 at the University of Windsor’s Ed Lumley Centre for Engineering Innovation. PHOTO BY DAN JANISSE /Windsor Star
He said he expects the Americans to bolster the penalties for not meeting those domestic content rules in the coming months. Volpe is also predicting the Canadian government will announce stronger-than-expected measures to deal with cheap Chinese EVs in the coming weeks.
“Watch for Washington, whoever the next administration is, to go after those tariffs on all incoming cars,” Volpe said.
“The low-cost roads are being cut off by governments, but it’s a tough time to be a Tier III with a footprint only in this country. Your balance sheet is only so malleable, at some point you’ll strike it and break it.”
Stellantis NV's vice president for artificial intelligence, algorithms and machine learning is the latest executive to depart the company.
Berta Rodriguez-Hervas, a leader in the company's growing software division, has resigned for a new job, which was not disclosed, a Stellantis spokesperson confirmed Friday. She had been with the automaker for more than two years, and previously worked for the chipmaker Nvidia, carmaker Tesla Inc., as well as Mercedes-Benz Group AG as a doctoral research associate.
"We thank her for her significant contributions to Stellantis and wish her all the best in her new endeavor," a Stellantis spokesperson said in a statement. "Our organization maintains high talent density, and we remain committed to talent development and succession planning throughout the year to ensure continuity. Our strong team is well-equipped to continue the excellent work achieved so far."
The maker of Chrysler, Dodge, Jeep and Ram has seen several senior executive departures lately, including Dodge and Ram CEO Tim Kuniskis, who retired; U.S. retail sales head Jason Stoicevich; Chief Customer Experience Officer Richard Schwarzwald, and former North America Jeep boss Jim Morrison. Automotive News first reported Rodriguez-Hervas' resignation.
She said in a video about a year ago that she'd worked on developing AI algorithms for autonomous vehicles, machine learning that could be used on radars and cameras in cars, as well as building teams to work on such projects. She said at the time that Stellantis offered a nice mix between "tradition and innovation."
Rodriguez-Hervas was still with the company late last week when she joined several colleagues for a Stellantis software demonstration at the company's Chelsea Proving Grounds in Washtenaw County. Executives discussed the development of new tech platforms, including STLA Brain, STLA SmartCockpit and STLA AutoDrive, as well as specific software products ranging from ChatGPT-powered voice assistants, to route planning features, and systems to help business owners track their car fleets.
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