In a bid to secure profitability in the electric vehicle (EV) market, Stellantis CEO Carlos Tavares has set a target for North America by 2025. The announcement comes as the parent company of Chrysler and Fiat, among other brands, reported strong full-year results and unveiled a new share buyback plan that bolstered the company's stock.

For 2023, Stellantis posted revenue of €189.5 billion ($204 billion), slightly surpassing estimated figures of €189.3 billion ($204 billion). This marked a 6% increase compared to the previous year, with global deliveries showing a 7% growth. Adjusted net income came in at €18.6 billion ($20.04 billion), up 11% from the previous year's figures, while adjusted operating income rose 1% to €24.3 billion ($26.2 billion), with an adjusted operating income margin of 12.8%.

To further emphasize its commitment to shareholders, the Netherlands-based automaker plans to repurchase €3 billion ($3.2 billion) worth of shares in 2024, building upon last year's buyback program. Additionally, a dividend of €1.55 ($1.67) per share, representing a 16% increase from last year, was announced.

However, the United Auto Workers (UAW) strike, which extended into October, impacted Stellantis' operating margins, resulting in a drop in adjusted operating income margin for the second half of the year, from 12.3% in 2022 to 11.2% in 2023. This led to a 10% decline in adjusted operating income for the latter half of the year, totaling €10.2 billion ($10.9 billion). While the strikes affected profits by $808.1 million and revenue by approximately $3.23 billion, Stellantis expects a lesser impact compared to its competitors, Ford and GM, due to higher pricing power.

Looking ahead, Stellantis anticipates a minimum commitment of double-digit adjusted operating income margin in 2024 and positive industrial cash flow. However, the company remains cautious, warning of a challenging year ahead due to factors like the impact of the EV product mix, lower prices, and labor costs, which will likely weigh on the adjusted operating income margin in 2024.

Despite the headwinds, Stellantis' measured approach to EVs seems to be paying off. The automaker currently leads the plug-in hybrid electric vehicle (PHEV) sales in the US, doubling sales year over year with 136,000 units sold. Stellantis' successful models, such as the Jeep Wrangler and Grand Cherokee 4xe PHEVs, have contributed to their industry-leading margins in the US. Furthermore, the company plans to launch its fully electric Jeep Wagoneer S in the fall of this year.

CEO Carlos Tavares highlighted the upcoming 2025 Ram 1500 pickup, which will offer both a fully electric powertrain and a plug-in hybrid variant with 500 miles of range – a move expected to capitalize on the growing demand for electric trucks. Tavares, who was previously criticized for the company's slow EV transition, now appears prescient as EV demand seems to have waned in recent months. However, Tavares emphasized that the EV transition will continue at a steady pace.

A notable aspect of Stellantis' strategy is its utilization of shared platforms that can accommodate both electric and gas-powered powertrains, instead of dedicated platforms pursued by some other automakers. Tavares explained that shared platforms are more cost-effective and provide greater diversity and complexity in an uncertain market.

Tavares also highlighted the intensifying competition in the EV sector, particularly from Chinese automakers. To stay ahead, Stellantis aims not only for margin parity between EVs and gas-powered cars but also for profitability. The company has already achieved profitability with its European EVs, and it now aims to replicate this success in North America by 2025.

While Stellantis' competitors, Ford and GM, have also reported strong earnings this season, primarily driven by their successful traditional gas-powered businesses, Stellantis' strategic focus on EVs and profitability in the segment has boosted investor confidence and contributed to the surge in its stock following the earnings report.