Stellantis in Lorraine: restructuring of the group during ongoing operations

In Trémery, Lorraine, 20 minutes by car north of Metz, the transformation of the European car industry is in full swing.

The factory built by the French manufacturer Citroën in 1979 was once one of the largest production facilities for diesel engines in the world.

Up to two million units were manufactured here every year.

Today, when the end of internal combustion engines in the EU has been politically sealed, the Trémery site is to become one of the largest factories for the production of electric motors.

Niklas Zaboji

Economic correspondent in Paris

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There are currently around 200,000, and by 2024 it is expected to be more than a million a year.

The engines are to be installed in the French-made models DS3 E-tense, Peugeot e-208, Opel Mokka-e and Jeep Avenger, which was recently presented at the Paris Motor Show.

Combustion engines are still rolling off the assembly line in the neighboring building to the 30,000 square meters of electric motor production in Trémery, but their share of production is gradually decreasing.

For Carlos Tavares, CEO of the Stellantis Group, which, in addition to Citroën, DS, Peugeot, Opel and Jeep, has had nine other car brands under its roof since the beginning of 2021, the conversion of the factory in Lorraine is not only symbolic of the general ramp-up of electromobility.

But also for the ability to manage a corporate restructuring during ongoing operations and to take the employees with you on the journey into the electric future.

"We will not split our company in two," Tavares promised during his visit to Trémery on Monday.

Renault recently announced that it would spin off electric activities from the combustion engine business, take it public and finance the transformation with fresh investor money.

Tavares called it "ethically very important" to maintain unity as a car company.

According to Stellantis, it offered its employees in Trémery more than 6,000 hours of training last year.

New partners

Tavares has ambitious plans.

The conversion of Trémery is part of his "Dare Forward 2030" strategy, presented in February, to sell only fully electric vehicles in Europe at the end of this decade;

in the second large market, North America, it should be at least every second vehicle.

The Stellantis boss plans to launch 75 new fully electric models by 2030.

The group's annual sales should double by then to around 300 billion euros - with a double-digit return on sales.

Without new partners, the group-internal drive turnaround can hardly be managed.

In Lorraine, Stellantis relies on the French company Leroy-Somer, which has been in the hands of the Japanese electric motor manufacturer Nidec since 2017.

In 2018 they founded the Emotors joint venture, with Stellantis and the Japanese holding equal shares.

Around 700 Emotors employees are to build electric motors in Trémery in the future.

Stellantis is also forging new alliances for the electric age at other stages of the value chain.

In Europe, the group, like its competitor Volkswagen, relies on lithium from the German-Australian start-up Vulcan Energy, which wants to start producing in the Upper Rhine Graben in three years.

Since June, Stellantis has also been a shareholder in Vulcan Energy with around 8 percent.

The battery metals nickel and cobalt are said to come from the Australian supplier GME, a letter of intent was signed in October.

And for battery cells made in Europe, Stellantis relies on a joint venture with the French energy group Totalenergies.

The Automotive Cells Company, which was founded for this purpose two years ago and which Mercedes has now joined, is scheduled to open its gigafactory in Douvrin in northern France in 2023.

“We master the technology better”

The sharp increase in energy costs does not change that.

They did not lead to a revision of the Gigafactory plans in Douvrin “at the present time”, Tavares said in an interview with journalists on Monday.

The same applies to the American climate law.

"The Inflation Reduction Act hasn't fundamentally changed anything." Rather, the law is part of the trend towards deglobalization that has been visible for a long time, to which the company reacts with increased production in the respective markets.

However, Tavares made it clear that investment policy could change if electricity and gas costs remain permanently high and politicians in Europe do not act on their announcements that more energy from renewable or nuclear sources will be available in the future.

By investing in solar and geothermal energy, Stellantis will cover around 50 percent of the electricity needs of its European factories itself by 2025.

The Portuguese, who had recently distanced himself from China more clearly than other car managers, underlined the competence of the European Stellantis locations.

If they lowered their costs, they stayed competitive.

"We master the technology better," replied the Stellantis boss in the direction of the competition from the Middle Kingdom.

He does not share the view that Europe cannot keep up in the production of electric car components - and emphasized that China is no longer the center of the world in terms of pure production costs.

Instead, locations such as India, Mexico, Morocco and Turkey have caught up.