Stellantis NV (NYSE:STLA) CEO, Carlos Tavares spoke during the automaker’s 2Q earnings call, saying the profitability of rival automaker, Tesla (NASDAQ:TSLA) is declining as the EV giant enters the world of manufacturing and competition.
"They are entering my world, the world of tight pricing, cost competitiveness, and the operational issues that a big company like ours may face," Tavares told the press.
"The result of the fact that Tesla is now entering my world, is that their profitability moved from more than 17% in the first half of 2022 to 10.5% in the first half of 2023," he said.
"They were more profitable than Stellantis, now they are less profitable than Stellantis".
Tavares stated that every car manufacturer, Tesla included, will inevitably have to deal with the escalating competition from Chinese electric vehicle producers within their home markets.
"What has been said by the Tesla CEO, whom I respect totally, is that they prefer growth to profitability. And we'll see to which extent they will be also challenged by the Chinese," he said.
"If we are racing for the bottom in terms of facing the Chinese with price cuts, Tesla will have problems with that strategy before we do, because we are more profitable than Tesla," Tavares added.
Tesla initiated a series of price reductions earlier this year. Placing pressure on both automakers and suppliers to keep their costs under control.
Shares of STLA are up 3.59%, while TSLA is down 0.43% in afternoon trading on Wednesday.