Stellantis N.V. (STLAM) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Stellantis Hydrogen Fuel Cell Technology Event. It's a pleasure to see you all connected throughout the world. So thank you for logging in today. Stellantis is about to unveil its major technological step in the electrified development vehicle, zero-emission technology, thanks to hydrogen fuel cell. Next to me on this TV set, 4 key actors of this new technology. Good afternoon, Carla Gohin, your Research and Innovation Senior Vice President.

Good afternoon.

It's lovely to see you. Opposite you, we have Xavier Peugeot. Good afternoon.

Good afternoon, Sandy.

You are a Light Commercial Vehicle Business Unit Senior Vice President. Franck Jordan, hello.

Hello.

Or [Foreign Language] also.

[Foreign Language]

You are Research and Innovation Director, Germany. Welcome here in Paris. And that's not least good afternoon, Dominique Sadoul. You are Advanced Powertrain and Energy Vice President.

And good afternoon, Sandy.

Thank you for all being here today on this TV set. I propose that we step in straight away into our subject with you, Carla. Let's talk about zero-emission and especially for Stellantis today.

Our talents mission is clearly to provide freedom of mobility with safe, distinctive, affordable and sustainable solutions. And sustainability is, of course, means for us paving the way towards zero-emission technologies. The first chapter of this transition is already a reality by the electrification and the battery technology solutions that we are implementing throughout all our ranges. And it is meant today to be a reality today by more than 39 electric -- electrified models by the end of this year. But within Stellantis, we are also aiming to keep and to be at the forefront of innovation by preparing the next steps of this transition. Finding new trades off between, of course, customer expectations, technologies, providing complementarity of solutions and, of course, finding also new solutions to provide higher range level and also charging time improvement. In all these fields, clearly, hydrogen fuel cell technology has strong assets, specifically for light commercial vehicle applications. And so that's why I'm very, very eager to present to you our Stellantis solutions to step in this new chapter of electrification.

Thank you very much, Carla, for these words of introduction. Xavier, what about the light commercial vehicles?

If you remember, Sandy, we revealed and launched, it was in October 2020, our electric medium van. It was for our brands. And so concretely, the Peugeot e-Expert, the Citroën ë-Jumpy, the Opel Vivaro-e and the Vauxhall Vivaro-e. We've immediately met very positive feedbacks and successful feedbacks from customers. More than 7,500 units sold. And we're also very proud to have received the prestigious award of International Van of the Year. As you understand, this electric medium van is part of a complete electrification strategy for our LCV. We recently launched our large van in the electric version. We also recently revealed the electric small van, which will be sold by the end of this year. Which means that by the end of 2021, as promised, we'll have the entire LCV range, fully electrified, and which I think is a very good asset. But I would like to come back to 2 figures connected to the electric medium van. The first one is 83% of our customers drive, on average, less than 200 kilometers a day. The second figure is that 44% of the customers never drive more than 300 kilometers a day. So which means that there are still a share of customers who are keen to drive more than 300 kilometers, and we need to provide them with an additional and complementary answer, which is the purpose of the day. And this is why we've decided to go for the hydrogen fuel cell medium van offer in order to expand the coverage of customer needs and also complete the zero-emission offer that we are providing.

Thank you, Xavier. Talking about hydrogen fuel cell technology. Franck, could you take us maybe a bit more into detail on this technology.

Of course. I'm very proud to be here today and talk about our newest technology. It's a hydrogen fuel cell zero-emission technology. For the users, we use rightsized fuel cell, a little bit smaller than most of the competitors are using and combine it with a large battery. This gives us the effect that we can rise electric motor by both sources, the fuel cell and the battery itself. By combining this, we have a couple of advantages and keeping all the standard fuel cell advantages like long range and fast refueling time. In this combination, we add a couple of more advantages. First of all, we can make use of our multi-energy architecture. We can improve the package situation because the fuel cell stack itself is smaller. We can improve the cost situation because we have smaller fuel cell stack. And we can also improve the efficiency of the vehicle because we can use the fuel cell and the optimum operating point. And also getting regeneration energy to the battery by deceleration and by breaking of the car. That's a win-win situation for the system we selected to do here on our LCV program. Of course, complementary to the full electric version as we have some customer needs for longer range and for faster refueling times. It's not a step 2 or a step that will be -- makes the e-batt, of course, a system of the past that will stay in parallel to the best system, of course. Hydrogen will, of course, be a major pillar in the energy transition towards green energy in the whole Europe, and you see it also in Asia and in the U.S. So all the governance are investing heavily in the ecosystem, and that's why we now are ready and present a car that fits to this ecosystem. It's a perfect match. You see the European Clean Hydrogen Alliance estimates are around EUR 60 billion that you want to invest in this ecosystem. So it's a huge amount of money done in Europe and all in the boroughs, there are activities like this ongoing to really help now paving a way into hydrogen green energy ecosystem. Stellantis, of course, want to have and will have a leading role in the assembly today, and we are the first step of more steps to come to really be part of this very interesting, very challenging new step into zero-emission energy.

Thank you very much for all this detailed introduction. Let's hear now from [ Lars Peter Thiessen ] in the video to come. He tells us more about the history, but also the challenges of this new technology. [Presentation]

Dominique, the LCV that we see behind you in the screen, is it really 100% zero emission?

Yes, of course. The fuel cell technology is a zero-emission one. In fact, the vehicle absorbed ambient air, combined it with gaseous hydrogen embedded, produce its 1 electricity onboard and rejects only pure water, sorry. To decarbonize mobility, we have to consider this kind of technology, in fact, to fulfill the coverage needed by customer. And if we enlarge your question to the global life cycle of the vehicle, including hydrogen production, we have some studies, for example, in France, one made by [ Herdem ]. We have some studies that show that fuel cell vehicle have a global warming potential at the same level as a battery electric vehicle, of course, by using green hydrogen. And we saw just before that many open investments are put on to provide and to help, in fact, to develop hydrogen, green hydrogen ecosystem and especially to enable zero-emission hydrogen mobility.

Thank you very much. I mean, it gets very clear now. Carla, prior to our event, we met with you a few days ago to talk about the Big 6, but also to come back on the genesis of this project. Let's hear from you. [Presentation]

And we now have the full picture of the genesis of the project. But let's come back on the smart and innovative mid-power architecture you were talking about with Peter Gross. [Presentation]

Xavier, who is the client for the hydrogen fuel cell medium vans?

With this hydrogen version of our medium van, we are clearly targeting new customers through usages, which are complementary to those already provided by electric medium vans. So as you heard, and to make it concrete and simple, we've got 3 main benefits. The first one is obviously a fast refueling, less than 3 minutes. The second one is clearly an enhanced autonomy, which is quite significantly above 400 kilometers. And three, that's very important to us. The fact that there is no compromise on performances. We are talking on LCV to professional buyers for very professional usages. So -- and they are not prepared to -- when switching to a zero-emission vehicle to weaken the performances they already know on other engines. So we decided to go for the right balance with this level of performances in terms of autonomy and refueling. And at the same time, to keep exactly the same level of performance, which would be about payload volumes, et cetera. So we'll be able to offer to our customers a hydrogen version, which will enable them to go to urban city centers, peri-urban city centers, and at the same time, to go for a long distance run.

Okay. Thank you, Xavier. Franck, are we actually ready for these clients?

Yes, of course, we are ready. So we passed that after 20 years of experiences with the experts and my team. We mastered all aspects of the technology. So we really are capable to deliver this technology. And besides that, you see that we have so many government investments now, though the ecosystem is building up. So it's now time to do the next step, and the next step is going into production. And going into production means, first of all, for us, really starting the production. But secondly, also to work with both the energy providers and to B2B customers to be ready on the whole page and not just for our product itself. And that's what we are doing intensively. What we see now and where we are today, we started at OSVs, that's Opel Special Vehicles, to do the preproduction cars. So my experts on fuel cell are training the workers to build the first cars, and the same people will soon also be in the production line and assembling the cars for the customers. So yes, we are ready.

Well, let's go to the Rüsselsheim pilot workshop then, and Dirk Wexel takes us around. [Presentation]

Thank you, Dirk, for the tour. And I remind you that if you do have any questions, we have a live Q&A session in a few minutes. So do don't hesitate to send them over, and we will be moderating them on our TV set. Thank you so much. Xavier, when will it be possible to actually order these hydrogen medium vans?

That's a very important question because today, we are altogether not just to make an announcement. As we did for the electric medium van, this hydrogen version of our medium van is something concrete. That's a real project, which is live. And we expect the first delivery to take place before the end of this year, before the end of 2021. So for this first step of sales, we will sell this car under the Peugeot, Citroën and Opel brands. We will sell left-hand drive versions only, 2 lengths, the medium one and the large one. We will focus on the light commercial vehicle only for this first step. Passenger car to come later on. And we'll obviously target professional users, business-to-business buyers. That's going to be a reality very soon.

Okay. So end of 2021, open for the orders to come. Thank you so much. Carla, it seems like you are actually positioning yourself as pioneers of this technology. I guess, a lot of work has been done in the last few months.

Yes, exactly, lots of work, but I fully agree. We are clearly pioneering in this technology. First of all, we are pioneering because, of course, with our mid-architecture -- mid-power architecture, we are clearly stepping in this fuel technology, hydrogen fuel cell technology in a very optimized way. Second, we are also pioneering because, just as Xavier mentioned, we are not talking about new fleet demonstration, new prototypes. We are clearly building a new B2B offer that will be fully complementary to e-powertrain LCVs. Third point, in which, of course, we are also pioneering is that we are highly and closely related to answering customer needs and finding the best compromises, leveraging our assets, leveraging, of course, our platform assets and minimizing our investments with this mid-architecture power. So clearly, we are aiming to lead the race towards this hydrogen transition. And Stellantis is just starting this new story, building this new chapter of the zero-emission transition.

And you understand the timing is key. Thank you for the sum-up and the words of conclusion, Carla. Before starting our live Q&A session in a few minutes, I propose that we listen to German Federal Transport Minister, Andreas Scheuer, and our French transport Minister, Jean-Baptiste Djebbari, who both, of course, support the hydrogen technology as an ecological transition. We'll be back just after that, stay with us. [Presentation]

Inspirational and optimistic speeches here. Let's start our Q&A session, lots of questions already during the last few minutes. Thank you so much for sending them over. Dominique, let's start with you. The first question is, why having 2 sources of energy, electric battery and hydrogen?

So fuel cell electric vehicle is, firstly, an electric vehicle powered by a new motor, so an electric motor. As you said, and unlike the conventional battery electric vehicle, we have on this kind of vehicle 2 sources of energy, hydrogen and electricity stored in the battery. Why we use these 2 sources of energy? In fact, it's to combine the best of the 2 technology to have the best efficiency. In fact, if we start with hydrogen, we use hydrogen for what? For energy. We need energy to go far in a vehicle. And we use hydrogen because we have some advantages to do that. The first advantage, of course, is as we already said, the fast refueling potential. You can recover more than 90% of the total energy of the vehicle in only 3 minutes. So we could have a long trip with this kind of vehicle. Second advantage is that the fact that the electrochemical reaction provide it. And with this it, we have the thermal comfort all long a year. And we have the same, in fact, the same range, if we consider that we have in winter or in summer. So it's a very good point. The third advantage is that we could recharge the battery directly by using the stack. And we have not to connect, to plug the battery on a grid to restart it. So we use hydrogen for energy. Concerning the power, we use the battery because the battery allows us to recover more energy for its deceleration. For example, when the driver push down the brake pedal. The power provided by the battery allows to -- for us to design a smaller stack and to put it in the engine base. We preserve the cargo volume and its essential to our characteristic for this kind of vehicle. At the end, with the battery, as we have also energy in the battery, we have up to 50 kilometer additional range with the battery.

Thank you, Dominique. Next question is for you, Franck. Interesting question. I could have answered -- actually question this one. What happens, actually, if hydrogen runs out?

Yes. If hydrogen runs out, and Dominique just told us it's the beauty of our system, we have a chance to drive 50 kilometers purely on electricity. So every time you have a socket around, you can charge the battery and you have this autonomy, pure electric. But of course, we hope that hydrogen doesn't run out and the infrastructure is building up so fast that customers can really use the beauty of long ranges on hydrogen. But in case, especially in the first years, maybe there's a coverage not as optimum as it should be, you can always drive electric.

Okay. So we have the plan B. Carla, you made different technological choices than the others' OEM, why?

So first of all, just as Dominique said, because for us it's the best way to take the best of both energies, hydrogen for wide range extension and electric batteries, of course, to fulfill the dynamic performances. Second point is that, of course, we wanted to leverage our own assets in our LCV platforms. And we know we have some strength in this area. And so a way also to go very quickly in implementing this hydrogen fuel cell technology within an existing platform was this best way to have and to choose this mid-power architecture. Third point, just as also mentioned by Dominique, it is clearly with this mid-power fuel cell stack a way to improve competitiveness of the solution and cost, of course, of the solution. And last but not least, clearly, this way was also a very good compromise, tackling the customer needs, just as mentioned by Xavier, and make us able to have this complementary solution between electrified, LCV solutions and this hydrogen one.

Thank you, Carla. Next question is for you, Xavier. Will other brands of Stellantis use the hydrogen fuel cell technology? I guess that they're talking about Fiat and maybe Vauxhall.

As I said, we will, for this first step, focus on some specific versions and dedicated to the Peugeot, Citroën and Opel brands. That's going to be soon, before the end of this year. But as you can imagine, having in mind the huge potential and portfolio of brands and products within the Stellantis company, we've already started thinking about potential new steps. It's a bit too early to say more about it. But with so many brands, so many products, obviously, we have some ideas, and we'll probably come back later to give more information.

Okay, to extend it. Thank you. Carla, will you share this technology with Toyota, which is your partner in compact and medium vans?

First of all, as you have understood, these brand-new technologies are Stellantis one, clearly. And -- but of course, in order to find new opportunities and being able also to decrease the cost of this technology, we will look at all the collaborations possible. But of course, also focusing on how we are providing answers to our customers. And really, of course, having these high importance on the way we improve and optimize the investments and be, at the same time, also very quick in the implementation of these solutions.

Okay. Thank you. Franck, we saw that the R&D department is located in Rüsselsheim, in Germany. Could we say that this technology is German and French?

Yes. It's German and French. We have most of the people in Germany. I say it's a home for the center of competence and the experience is there. But without Dominique's teams, we would never have the product where it is today. And don't forget, we have 2 strategic partners, Symbio and Faurecia, which are both French companies. So it's really Germany and France. And of course, we're working international in whole Europe. But you want to say it this way, it's a German-French technology.

Okay. We like that. Xavier, will all European countries be considered by the hydrogen LCV launch?

We've made the homologation for this hydrogen medium van for European countries first. And as you know, in Europe, there are 2 countries which are, as you said, frankly, leading the way. Clearly, pioneers in this hydrogen ecosystem, France and Germany. Obviously, we are confident that other countries will follow. And at Stellantis, we will support the development of full hydrogen ecosystem in additional countries, and we are absolutely confident that this will come.

Thank you, Xavier. Carla, next question, very interesting question. Everybody knows that hydrogen technology is expensive. What is your vision on the topic?

I fully agree. Clearly, it was in the video. It was also assessed that it is still one of the key challenges we need to overcome. But looking at these cost of the technology, I think that it's also a never-ending story of the chicken and egg. So we need, first, to find the best architecture, the most competitive one. And through our mid-power architecture, I think we have it. Second, of course, we need to start and looking at the overall ecosystem that is just growing, being also highly and intensively developed within the European context. This is the moment. So ramp up in order to bring volumes and to be able, of course, through effects of scale, to minimize and decrease the cost. But last -- and last but not least, maybe a very important thing is that this cost decrease aims, and we aim to build it through really real customers. And so we are not talking once again to prototype. We will have real B2B customers, feeding them with real solutions and, of course, highlighting and building this ramp-up in order to decrease costs.

Absolutely. I understand the scheme. Xavier, is there enough refueling stations in France, but also in Europe then?

The process of implementing new refueling station has obviously started, mainly in France and Germany. There are currently 25 stations in France, 90 in Germany. These figures will continue to increase. And obviously, we are working with lots of energy providers in order to be able to offer fully packaged offers, which includes filling station in order to be able to progressively accelerate these numbers. And again, I think that this will come.

And when we hear what the 2 minister says, I mean, they will be also helping you on this.

Absolutely.

Dominique, why not offer more hydrogen tank to have a lot more than 400 kilometer of range?

It's just a compromise we made as we have a short time to refuel the vehicle. In fact, this will not be an issue for the customer. So we decided, in fact, to prioritize the main characteristic payload and cargo volume. And so at the end, we have just one driver to be customer centric.

Okay. Carla, will there be a hydrogen offer for passenger cars?

So as you have understood, clearly, we are, today, putting the priority on these LCV's applications and professional users, because we are answering specific expectations and needs that are today not fully answered by the electric versions. So let's go because we are not pushing technology for pushing technology. So that's why we are really customer centering and leading this first step in this LCV part. But of course, looking and seeing the ramp-up, also looking at the extension of the ecosystem, the charging and refueling ecosystem that will be provided within Europe, it makes sense, of course, to look at the application for next generations on passenger cars. But this will be part of our hydrogen strategy within Stellantis, also bringing this technology to all the brands of the group. And so yes, this will be part of the next steps.

We will see that in the future. Thank you, Carla. Franck, first question about competitors. How does differ from Toyota Mirai and Hyundai Nexo?

It's a little bit like the question Carla just answered. We -- our analysis shows that the need is more on the commercial professional side and not so much on the private customer side. So we're clearly focused on this customer group. Toyota and Hyundai, they had a different past. So they started with a full fuel cell architecture versus redo multi-energy was really the benefit of having lower investments and converting a car that is already developed. Hyundai and Toyota did it in a different way. So I strongly believe we do it right because we know our customer base. We know where the market will develop in Europe, especially. And we also are more cost sensitive in our texture solution using mid-power range fuel cell and also having a multi-energy architecture. That's the right way to do it and competitors did it different. We believe we are on the right path, definitely.

Okay. Xavier, we were expecting such a question. Have you already estimated a cost for these vehicles?

Of course, we have. But I think that although we want to go fast and want to be concrete, as you understand, first deliveries before the end of this year, we would like to go step by step. So today, we are announcing the project. We are giving first deadline, which is first deliveries by the end of this year. But please give us a little more time to explain and give all the information, and they will come in the coming days, weeks and months in order progressively to establish all the ingredients to go for a successful launch, as we always do.

It's been the best strategy. Thank you very much. Question for Franck. Are there any additional safety measures required for fuel cell vehicles?

Yes. Of course, the safety is the highest good for our customers. Safety has our highest priority. We cannot compromise safety at all. The cars was developed to the highest standards. We already consider standards that will come in the next generation and not the current ones or the ones in the pipeline. So we want to be absolutely sure that the car is as safe as possible. We have a reinforcement structure on the fuel cell tank. We have a lower cover to protect for stones. So we did everything possible to make sure that the tanks are protected. And we are sure that with this concept, and we have pressure valves, switching off the system in case of a leak. We absolutely should we do everything possible. We did all the safety analysis the car is as safe of every car group that are [ existing ]. There's no compromise on safety. It was really from the very first day, a key role to say this car needs to be safe because they want to have a product for customers and not demonstrate our car. That's a big, big change. And we do everything possible the car is safe.

Okay. Thank you, Franck. I'll save there. That's going to be our last question, Carla. What are the next steps of the fuel cell road map?

Okay. So just as you have understood, our first launches are really focused on these midsized vans from Peugeot, Citroën and Opel, of course. But we are Stellantis. So we will have, of course, in the next LCVs range and lineup, new opportunities with all the brands of the group. So this is clearly the second step, how we would leverage our technology to the other brands on this LCV application first. And after that, as I mentioned, of course, looking also at how the ecosystem will grow because, of course, it will be part of the solution and the availability of the solution. We will look, of course, at the implementation of this technology on passenger cars lineups. And I think that 1 of the most important strength we have is that we are Stellantis. So we have 40 brands clearly asking to build these next steps on this zero-emission transition solutions. So I think that we will continue to lead the race in this transition, in these hydrogen new technology and new chapter, of course, of the technology for Stellantis.

And I'm sure it will have a great impact on the market, obviously. This is the end of our Q&A session. This is the end of our event. Yes, eventually, we do have to say goodbye. Thank you for sending all your questions over. Thank you, Carla, Xavier, Franck and Dominique for being here today on our TV set and answering all these very interesting questions. Good luck for all the work that has to be done. Congratulations for all the work that has been done. Very exciting road ahead. Just before ending, let's see a little video of the great partnership between Stellantis, Faurecia and Symbio. Have a nice end to your day and see you very soon. [Presentation]