The High Cost of Electrification: Will Middle-Class Buyers Be Left Behind?

The Stellantis concern, like most other car companies, is working on the transition to electromobility. But the costs of such a change are so huge that one of the downsides may be an increase in the price of cars beyond the financial possibilities of the middle class.

“It’s the elephant in everyone’s kitchen,” says Mike Koval Jr., the head of the American Ram brand, which everyone knows about but doesn’t talk about much. “The cost of electrification is high, so we absolutely need to ensure that we protect the profitability of the internal combustion engine business that we have to help fund the transition to electricity,” he explains.

In addition, ensuring profitability has not been easy recently in light of the pandemic, lack of chips, inflation or changes in legislative frameworks. The cost of developing and manufacturing electric cars is one of the reasons why Stellantis shut down the Illinois plant where it previously made Jeep Cherokees at the end of February.

According to the head of the concern Carlos Tavares, the question is how the company will deal with the costs of electrification. “If we don’t do anything about it, we’re going to shrink the market significantly because the middle class won’t be able to afford electric cars, simply put,” he says.

“It’s not in the interest of corporations, it’s not in the interest of citizens, it’s not in the interest of unions that we shrink the market by being too expensive for the middle class,” he adds.

Stellantis plans to launch dozens of electric cars for the Ram, Jeep, Dodge and Chrysler brands worldwide by 2030. An electric version of the Ram ProMaster van, which is a rebadged Peugeot Boxer, is due to appear in the US later this year, and the 1500 REV electric pickup is set to hit the market next year. Jeep will add production versions of the Recon and Wagoneer S concepts to the avenger, which won the title of Car of the Year in Europe, while Dodge is working diligently on an electric muscle car that will replace today’s charger and challenger.