Stellantis’ €30 billion ($35.5 billion) electrification strategy may be poised for headwinds as its volume is exposed to the “wrong markets,” according to analyst Matthias Schmidt.

According to the head of Schmidt Automotive Research, the carmaker’s price sensitive southern and central European market exposure, as well as Brazil and the lack of China exposure, create hurdles for crucial battery electric vehicle (BEV) scaling.

He believes that its “value for money” markets in Europe are likely to be slower in adopting a 100% pure electric direction. The same case would apply to Brazil, where Fiat is highly exposed. Yet, lack of presence in China – the world’s biggest BEV market – is also seen as a “missed opportunity” for gaining scale, Kallanish notes.

“Stellantis are unable to profit from their volume size in terms of BEV scaling and economies of scale, as first glances suggested, which could impact the potential of their profitability in an electrified world,” Schmidt says.

On 8 July, the carmaker owner of 14 brands unveiled its electrification plans, targeting over 70% of its sales in Europe and over 40% in the US to be low emission vehicles (LEV) by 2030. The investment through 2025 would cover four flexible BEV-by-design platforms, scalable family of three electric drive modules and standardised battery packs to cover all brands and segments.

Stellantis’ ceo Carlos Tavares said the strategy “focuses on the right amount of investment, on the right technology to reach the market at the right time, ensuring that Stellantis powers the freedom of movement in the most efficient, affordable and sustainable way.”

Yet, Schmidt notes that it appears the ceo “is looking at holding onto profitable PHEVs (plug-in hybrid electric vehicles) and mild hybrids right up to 2030,” particularly in Brazil and southern, central and eastern Europe.

To meet its LEV targets, the group will have to secure more than 130 gigawatt-hours of capacity by 2025 and over 260 GWh by 2030, met by five gigafactories in Europe and North America. Demand will also be complemented by additional supply contracts and partnerships.

LEVs include BEVs, PHEVs and mild hybrids, with the latter still featuring an internal combustion engine.