Stellantis CEO Carlos Tavares’ highly anticipated technology announcement fell flat, with shares of the $57 billion carmaker barely budging on Tuesday. Tavares revealed a 50-50 joint venture with Foxconn Technology, the iPhone assembler, called “Mobile Drive,” aimed at developing in-car software and enhancing the “automobile-centric lifestyle.”
Despite the buzzword-heavy presentation, this move is strategically sound. UBS estimates that by 2025, global car software, including self-driving features, could generate $81 billion in operating profit – a figure expected to more than quintuple by 2030, far outpacing profits from vehicle sales. If Stellantis captures 8% of this market, consistent with its market share from last year, the joint venture could contribute nearly $7 billion to its operating profit in 2025, about 80% of the company’s 2024 result.
Tavares’ decision to team up with a major tech player like Foxconn, rather than following Volkswagen’s solo path, may help Stellantis reach the market more efficiently. With shares trading at 7 times forward earnings, a discount compared to Volkswagen, investors might see an encouraging boost.
Earlier in Capital Calls:
– Accor makes a late but bold entry into the SPAC scene
– UK’s Eurostar misses a trick with its strategy
– Telecom giants face renewed capital expenditure concerns
– Scor’s messy succession could trigger M&A opportunities
– Heineken might need to pay a premium for its African venture
Capital Calls: Stellantis spins wheels with Foxconn tech deal
