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

Good morning, good afternoon and good evening to each of you from Amsterdam. Welcome. Thank you very much for joining us today. Analysts, investors, journalists, industry partners and of course, Stellantis colleagues. I am grateful you are here. Before we start, let me state that at this moment, our thoughts and prayers go to our 71 Ukrainian colleagues, their families and friends. Personally, and on behalf of Stellantis, I would like to share with you my deep personal concern for the serious situation our colleagues are facing. The safety of our teams is always our #1 priority. We have set up a dedicated team to support and help them. Last night, we were in touch with all 71 of our colleagues. At this moment, we cannot reach 3 of them, but we continue our outreach and support. In what is a rapidly evolving situation, we continue to monitor the health and safety of our teams. At Stellantis, we condemn all kinds of violence and aggression. Whatever the business consequence, Stellantis will apply all of the sanctions decided. We will always be compliant, global and diverse with our 170 nationalities. We are about creating better lives, more freedom of mobility and leveraging diversity as a powerful tool for long-lasting peace. Stepping back, we believe that fragmentation, the opposite of globalization, can lead to chaotic times. In this context, we have decided to set up a dedicated fund to help support refugees of the crisis in Ukraine. Because we hope that the situation will come back to reason, we are proud to present to you our long-term strategic plan that will contribute to our sustainable future, clean, safe and affordable mobility for all. [Presentation]

Today marks a big day. Stellantis' first long-term strategic plan. It has been just over a year since Stellantis was created, an extraordinary first year for all of us. No doubt that it has been the most intensive time in my 40-years career. Together with the leadership team, we successfully managed intense headwinds with record financial results; net revenues up 14%; adjusted operating income nearly doubled year-over-year; net profit nearly tripled year-over-year; and strong synergies, execution with results above expectations. At the same time, we set the foundation of Stellantis aiming for greatness; launching more than 10 new products, which further strengthened our portfolio of 39 low-emission vehicles. I have also had the great opportunity to visit 12 countries and nearly 30 manufacturing sites, connecting with colleagues hearing their ideas and having meaningful exchanges about the future of Stellantis. I can testify to the extraordinary energy and enthusiasm around our company for building something truly unique. I deeply treasure the privilege I have to serve Stellantis as the CEO, fully conscious of the value that we can bring to the society in which we operate. The word "we" is very important. And one of the most important things we did in our first month together was to define our purpose, our reason for existing. The guiding light for myself and everyone else who is contributing to Stellantis growth. As John shared, powered by our diversity will lead the way the world moves, grounded in 4 key values with the customer at the center of everything we do. While agility and innovation constantly move the limits of the possible, holding close our collective pledge to make a positive difference, not only for our company, but for all our people, our communities and our planet too and harnessing the powerful energy that comes from winning together. Setting our purpose and 4 core values was key to bringing 2 companies together, both with deep roots and highly talented individuals. We are pushing every boundary. I'm grateful to every Stellantis employee for their daily contributions to building our common community and achieving greatness. Before we get into the plan, I want to share with you in the name of all Stellantis employees, our commitment to our collective future. Stellantis will lead the automotive industry and achieve carbon net-zero by 2038 from well to wheel and throughout the entire supply chain. We know we can be part of the solution. And we are ready to do our part in protecting humans from the negative effects we are already seeing from climate change. This is our promise to society. Reaching the carbon net-zero objective by 2038 is a daring challenge, a daring challenge we are proud to lead. I'll share more later on how we'll get there. It's with this commitment in mind that I introduced to you Dare Forward 2030. Dare Forward 2030 has embarked 14 strategic test teams gathering around 300 cross-functional team members spanning our regions, functions and brands. The plan will take Stellantis from its first year and move us into a sustainable mobility tech company. It is our blueprint. It is about how Stellantis will engineer the future of mobility and take bold steps every day with an entrepreneurial spirit to create a new era of mobility. Dare Forward 2030 also paves the way for Stellantis' ambition to be second-to-none in value creation for all stakeholders. The plan focuses on how Stellantis will thrive through the decade, where the first 3 years until 2024 are our commitment, the second 3 years until 2027 are our objectives and the remaining 3 years are our direction. Unless otherwise noted, the targets I will talk about are related to 2030. It is clear we are living in a world where freedom of mobility is at risk. And all of us at Stellantis are working every day to provide cutting-edge freedom of mobility. This plan is the start of Stellantis' greatness and our first imprint on the future. So let's dive in. Therefore, it was built to achieve 4 core targets by 2030: One, slashing our carbon emissions in half by 2030 on the path to achieving carbon net-zero in 2038; two, setting the course for 100% BEV sales in Europe and 50% in the United States; three, achieving #1 position in customer experience; and four, doubling revenue while transforming our business models and sustaining double-digit operating margin throughout the entire plan. To achieve these targets, we have organized ourselves around a holistic plan. We will bring second-to-none care, Tech and Value to all of our stakeholders, grounded in a century-long foundation with deep roots, where the Stellantis community spans 170 nationalities across all 6 regions of the world, contributing their unique perspectives and experiences. Diversity is in our DNA. It means that Stellantis is at home around the world, able to answer perfectly to our fragmented world, relying on our governance structure to drive our matrix organization based on our regions, functions and brands with the operational excellence and speed of execution as our hallmarks. Excellence that depends on our 4 critical functions to reduce complexity at all levels. Our engineering teams are executing intense high-tech reskilling efforts and driving toward maintaining a 30% more efficient R&D and CapEx versus the industry. A key priority for us, as you well know and for all of us in the industry is to lower the cost of EVs to provide affordable transportation for all. Our purchasing and supply chain team is focused on lowering it by 40%, while also implementing a resilient sourcing strategy that is reliable and dependable no matter the scenario from Tier 1 to Tier N, management and vertical integration. Our manufacturing team will reduce average transformation costs by 40% through rightsizing, repurposing and transformation initiatives related to our electrification push. And with our scale, our sales and marketing team will reduce distribution costs by 40% while modernizing and digitizing our distribution operations. All of this is being done to keep the breakeven point below 50% of shipments. This is the way we are protecting the company and our people in the long run. Last week, we announced that we achieved EUR 3.2 billion of synergies in 2021, above expectations. Today, I'm happy to announce that we will deliver the EUR 5 billion in synergies more than 1 year ahead of schedule. Stellantis is charged up. We are activating all the levers to reach an even better level of efficiency. We are doing this so we can continue investing in our incredible house of brands and in our products. Some say we have too many brands. We say we have a brand that is tailored to fit every customer needs. All together, they make up a smart, thoughtful and intentional portfolio that covers a wide range of prices, body styles and capabilities. I am proud of this and we are capitalizing. We have defined a clear, core model strategy for the decade that will improve revenue coverage up 7 points supported by more than 100 launches. A more regular cadence will reduce the average age of our showroom by 2.5 years by 2025. Our premium and luxury brands will benefit with more than 20 launches by 2030. Protecting and nurturing these brands are both a key asset and a clear opportunity. We have a plan to multiply by 4 the revenue and by 5 the profit. This segment will then go from 4% of new car revenue to 11% with more potential to grow. And we will end the decade with only BEV sales. A key element of our foundation is our electrification rollout. We plan to reach 75 BEV nameplates by 2030, bringing us to 5 million units of global BEV sales. This is core to who we are. We will have BEV-only launches in the luxury and premium segments as of 2025 and then rolling throughout the portfolio. Importantly, all launches in Europe will be BEVs in 2026 and beyond. Our EV offensive fits market evolution and we are well into the development cycle of our new electrified products. But numbers aren't that fun. So let me show you some product. For Jeep, it is my pleasure to unveil the first ever fully electric Jeep SUV to support its worldwide quest towards 0 emission freedom. Electrification will amplify Jeep's core brand attributes: capability, open air freedom, fun and style. This new model will launch during the first half of next year and is the first of a comprehensive, fully electric Jeep lineup that will cover every SUV segment by 2025. Zooming in on the U.S. EV market. 1/3 of our EV portfolio is dedicated here. Our aggressive product offensive will bring battery electric options to every iconic American product family no later than 2025. We plan at the very least to have 25 battery electric nameplates. Let's take a quick spin through our brands. In January, we revealed that Chrysler will launch its first electric vehicle by 2025. With the Chrysler airflow concept, the brand plans to go fully electric by 2028. And later this year, Dodge will unveil its first battery electric muscle car concept, which will offer the performance and unique attitude that Dodge is known for. This new model will hit the streets in 2024. For Jeep, we'll have 2 products coming, an off-road Jeep UV and the lifestyle family SUV, both in 2024. Earlier this year, we announced Amazon will be our first commercial customer for the Ram ProMaster BEV coming in 2023. With input from Amazon, we designed the vehicle with unique last-mile delivery features. Together, we are bringing thousands of electric vans every year to support a more sustainable delivery network. Now let me show a glimpse of what else is to come, something we are all very proud of. Our Ram 1500 [ BEV ] is coming to the hot pickup market in 2024. According to our internal performance index, our Ram 1500 will outperform all competitors on the attributes customers care most about, range, towing, payload, charge time, really thrilling. It's built on top of our new STLA frame architecture, designed specifically for full-size electric vehicles. Make no doubt, we'll bring the best electric truck to the full-size segment. And Ram will continue delivering fully electrified solutions in the majority of its segments by 2025 and a full portfolio of electrified solutions for all of its segments no later than 2030. The competition is fierce, and we are ready to take on the fight for the top spot. Yes, rest assured, when we put the Ram badge on our BEV pickup truck, it will be something our customers will be proud of. Together, our brand portfolio, our operational excellence and our global diversity form our strong foundation, a foundation created from rich histories, iconic products and a passion for automobiles. It's truly an amazing time to create the future of mobility, okay? Now let's get into our 3 focused areas: First, our Care pillar. To us, it means care for the planet, care for the customers and care for our employees. We are going to be the industry champion in climate change mitigation. More global commitments are needed to fight against the 1.5-degree Celsius rise in global temperatures and avert the worst effects of climate change. It is the reason why we have set our path to achieve net-zero emissions by 2038 and cut our carbon emissions by half by 2030, benchmarking our 2021 metrics. We took 2021 as a reference, which makes the trajectory of our ethical commitment very bold compared to peers. This carbon net-zero trajectory is one of our 22 corporate social responsibility commitments that we will report on every year. We'll reduce emissions across Scope 1, Scope 2 and Scope 3 and limit compensation to the bear minimum. This plan obviously relies on key external factors, but we will do our part. Taking a leadership role in decarbonization is the best path to protect our company, our employees, and generations to come. This path will not be complete without expanding our circular economy activities. We must change our consumption mode and the way we design our products. And switch from a linear economy to a circular economy going from a cradle to grave to a cradle to cradle business model. To do this, we have developed a comprehensive 360-degree business based on the traditional 4 Rs: repair, reuse, reman and recycle. It will be an independent business unit that will bring up to EUR 2 billion in revenue by 2030. We'll offer our customers transparent, sustainable and affordable products and services without compromising quality. The circular economy methodology will also extend to our manufacturing facilities. We'll dedicate specific factories for this activity in North America and Europe. An integrated ecosystem is vital for preserving and protecting the planet's resources, developing this business with the same intentionality and rigor as our other arms will result in an increase of revenues by 4 for parts and services and by 10 for recycling revenue. Let's now move to care for the customer. Every customer counts. Every journey matters. This is especially important to me as we are to become the #1 in customer satisfaction in every market, in our products and our services, paying special attention to the full end-to-end experience inspiring actions throughout the value chain. We'll do this in 4 main ways: One, reshape the customer experience and reach an unprecedented level of customer satisfaction with our electrified products and services, improving all KPIs by 2024; two, use the big data to reduce our time to fix by 50%; three, improve each customer touch point with a new holistic view of the customer journey; and finally, always keeping the customer at the center of everything we do. We are spending significant time thinking about and building technologies to make it easier for customers to interact with the Stellantis universe. Our intention is to remove any customer friction and hit this aggressive target by the end of the decade. As we continue to put a laser focus on the customer journey, it's also vital to focus on our employee journey. We know we aren't the only automaker chasing tech talent. The competition is fierce, but top talents are hearing our messages and coming to us. I am thrilled to share with you some of our recent new team members, Neda, Vishnu and Berta. [Presentation]

I can tell you, these folks are driving change and challenging the status quo. Since EV day in July, we have received 15,000 resumes coming from people with experience at tech companies. We have already filled 300 open positions. This is a first step towards our objective of having 4,500 people in our software division in the next 2 years. I thank them warmly for their contributions already to our company, but we also want to unleash the full potential of existing talent, encouraging their skills, perspectives and energy through a 4 pronged approach. After all, diverse ideas are at the core of Stellantis. So first, our leadership team should represent all of us. Stellantis is a meritocracy, and we will reward and advance any talented individual, who exemplifies the top leadership skills. Specifically, by 2030, we aim to have no less than 35% of women in leadership roles. This target is absolutely necessary to build a business that truly reflects the incredible talent we have in today's society. In our fast-changing industry, we are focused on supporting our employees with initiatives to accelerate their skills, evolution to feed their appetite to Dare Forward. We are launching an unprecedented period of professional development through reskilling and training programs. Our Software and Data Academy launched in January 2 aims at reskilling 1,000 engineers per year. With customer acceptance of electrification still to be proven, we launched an electric academy in mid-February to [ upskill ] the entire Stellantis sales workforce by 2025. We also remain committed to remote work as COVID-19 has taught us all very valuable lessons on the agility, the flexibility and the dedication our employees have even in the toughest of situations. With remote work in place, we will leverage our real estate footprint to cut emissions by 50% by 2025, helping contribute to our overall carbon net-zero emission. Finally, we are strengthening our talent pipeline to embrace the dare forward mindset. By 2025, we will double the amount of leaders with direct P&L responsibility. We will also provide entrepreneurial training to our high potential leaders to encourage value creation inside their specialty and across the business. The work we are doing internally in just our first year is making a difference. All right. Let's move to the tech pillar. The tech pillar focuses on our core innovations spanning 4 areas of the company. First, let's focus back on our electrification strategy to show the how we are getting to our targets, the strategy we laid out on EV Day focused the right amount of investment on the right technology to which the market at the right timing with over EUR 30 billion through 2025. Our 4 BEV centric platforms, STLA Small, Medium, Large and Frame are the backbone of this plan, all designed with a high level of flexibility and component sharing. The platform's partner with our family of 3 electric drive modules that are compact, flexible and easily scalable. We are on track in performance and timing on both fronts. Further, our battery ecosystem is well set with our electric powertrain joint venture with Nidec, our fast-charging network rollout with free to move e-Solutions. And our planned 5 Giga factories spanning North America and Europe that will together with Samsung, LG, ACC and other sourcing contracts contribute to our estimated needs of 400 gigawatt hour by 2030. This is an increase of 140 gigawatt hour from our initial plans. With investments in factorial and ACC, we are also accelerating development of solid-state batteries, to give us more range, faster charging and lighter battery technologies. And with Vulcan to secure a decarbonized supply of battery-grade lithium hydroxide. We are innovating, driving costs down and packaging the latest technologies in all our vehicles from the most affordable ones to the high-performance offerings. We want to have a future where mobility is accessible to all. The combination of the platforms, EDMs, high energy density battery packs and charging networks deliver best-in-class performance in efficiency, range and recharging. Our electrification plan does not stop at battery power though. We are also a front runner in the hydrogen race. Our solution combines the advantages of hydrogen fuel cells and electric battery technology. Fuel cell electric vehicles are particularly suited to the needs of commercial vehicle customers, requiring long range, fast refueling and zero emission without compromising payload capacity. That's why we were the first to launch an hydrogen van for last-mile delivery. Late this year -- late last year, we delivered our first orders of Citroen Jumpy, Peugeot Expert and Opel Vivaro, mid-sized vans to important fleet customers. Initial feedback is very positive, thanks to the 3-minute fast refueling for 400 kilometers of driving range and we already have a good level of orders. In 2024, we plan to increase our mid-van production capacity and extend our hydrogen offer to large vans in Europe. And in 2025, we'll start extending our large van offer to U.S. customers while further exploring opportunities for heavy-duty trucks. Moving to our software transformation. We are working at full speed to reach a fleet of 39 million connected vehicles with a regular over-the-year updates, representing up to 400 million every year. As we shared in detail during our Software Day in December, this fleet of vehicles will generate EUR 20 billion of revenue at 40% gross margins through 5 business pillars. Our strategy is to disconnect the hardware and the software cycles to create a product that can evolve regularly following customer needs. We'll have 3 technology platforms deployed at scale. STLA SmartCockpit, STLA AutoDrive and STLA Brain across the 4 EV-focused vehicle platforms. We will vertically integrate key elements of new electronics and software platforms closely managing the complete electronic supply chain, including semiconductors to ensure access to the best technologies and guarantee the fulfillment of Stellantis volume ambitions. STLA Brain will feature the most advanced systems on chip in cooperation with key technologies, partners and we will complete our targeted vertical hardware and software integration for all products before 2030. Our 3 new tech platforms are being developed with truly leading-edge innovators. Our cooperations with Amazon and Foxconn on STLA's SmartCockpit will make our vehicles the most wanted, most captivating place to be using AI and advanced cloud solutions. We will also master the highest levels of autonomous driving technology and ensure our customers are confident that tech is safe and reliable. We are already offering among the best Level 2 solutions. In 2024, with the STLA AutoDrive introduction, we'll bring a hands-free, Eyes-Off Level 3 solution with our partner BMW. As the global leader in LCVs and together with Waymo, we are preparing to solve the Delivery as a Service challenge and bring an autonomous solution for light commercial vehicles. Leveraging our exclusive partnerships, Stellantis will deliver the first prototype vehicles for the project by the end of 2022. Our ambition is to make commercial use of this technology available in the second half of the decade. With all the new incoming data from the 34 million connected vehicles, we plan to create a Stellantis data business to manage this critical business pillar of our software strategy. It will contribute EUR 9 billion of the EUR 20 billion in global revenues with up to a 70% margin. We look at data in 2 ways: One, to support our internal operations, especially the continuous improvement of our customers' experience and the development of AI-based features; and two, to support Data as a Service for external customers. Finally, to further chase breakthrough technologies from outside our traditional network, we'll set up the Stellantis corporate venture fund. With an initial fund of EUR 300 million, we will identify the best start-up potentials to accelerate the innovation potential in our company. We intend to be a strategic investor, aiming to adopt their advanced technologies. You have now seen the big picture. We are moving, and we are moving fast to become a mobility tech company. Now on to our last focus area, our value pillar. Our value pillar is all about boosting value creation and unleashing the power of the company, thanks to 3 main levers: digitalization and entrepreneurial spirit and regional roots. So let's go. Our customers want 24/7 access, flexibility and personalization to get what they want, when they want it, a seamless journey. So we are continuing to redefine and expand our e-commerce capabilities, giving us the ability to establish a direct relation with our customers. We have already started in 2021. We sold 100,000 units online. Now we are taking the lessons learned and plan to expand our online sales doubling each year until 2024, reaching 800,000 vehicles. And by 2030, 1/3 of our sales will come from online customers. Taking it to one step further, we are creating a holistic and digital marketplace bringing all of Stellantis together in just one click. Using AI, the marketplace will recommend products and services based on customer needs. Combining the power of our brands and the diversity of our portfolio in one home is something only a company like Stellantis can do. For example, our customers will have access to products and services related to their cars like accessories, maintenance, warranty, insurance, over-the-air updates and online booking tools. Also, for our mobility services, they'll be able to access daily car rentals, car sharing or electric services. We are going to pilot the digital marketplace first on a smaller scale and progressively ramp up to all regions, all brands and all services by 2027. We are targeting full expansion in 2030. This will be a new channel for the entire business and will contribute up to EUR 4 billion in services revenue. Now let's focus on how we are going to further unleash the entrepreneurial spirit in some dedicated businesses with huge potential. Seven specific areas have been identified, 2 have already been singled out, circle economy and data business. The 5 other focus on mobility, financial services, preowned cars, aftermarket and commercial vehicles. First on mobility with free to move. We are now running a profitable mobility service, something many others have tried and failed. Now it's time to scale up. Over the decade, we will expand our presence worldwide, growing to 15 million active users and to a net revenue of EUR 2.8 billion. Moving to our financial service arms. We plan to double the net banking income by 2030 to EUR 5.8 billion from where we are today. We are getting there through 4 main levers, recreating our full-service captive finance arm in the U.S. to get back in the race with the other OEMs in North America, creating a leading operating leaser in Europe with a fleet target of around 1 million vehicles in 2026 through our new partnership with Credit Agricole, reshaping our European banking activities creating one single and efficient banking setup for each country and accelerating our affinity insurances to more than EUR 4 billion revenues in 2030. On the pre-owned front, we are going global, creating a worldwide multi-brand and multichannel business model. Our objective is to at least double sales by 2030. We know the preowned businesses address key megatrends facing our world from digitalization to reuse to affordability. Here's how we envision our current assets pulling together to create this global plan. Spoticar will be the unique Stellantis label worldwide with 2 million sales. Hermes will continue as the online European leader with strong development plan in the entire region, reaching EUR 6 billion revenues. Also, remarketing efficiency is key. So we will leverage our Finco and LeaseCo volumes to ensure stock turnover lower than 30 days. For our aftermarket operations, we intend to increase revenues by 50%, thanks to a global offering. To get there, we will multiply by 4 the turnover on our multi-brand independent aftermarket sales, leveraging our 4 global existing brands, optimize penetration of independent repairers and e-commerce channel up to 50% and pursue our logistics cost improvements plan to increase competitiveness. It's a business model that works and will take us to EUR 20 billion in revenue. And finally, let's go to our commercial vehicle businesses. We have a powerful commercial vehicle portfolio, built to support the full range of needs. Our goal is simple, to be the undisputed leader in terms of market share and profitability, thanks to the breadth and quality of our products and services. We will create a new business entity dedicated to our professional customers and their needs. The management team will have more autonomy as they drive to take the #1 position and double the revenues by 2030. We'll have 26 new launches with one major product launch per year and an electric offer in all segments. By the end of the decade, we will reach a 40% zero emission mix. We will tap into our full range of our electrified options using battery electric vehicles, hydrogen fuel cells and our new range electric paradigm breaker technology. We'll also bring over-the-air capabilities for all new vehicles and help customers to do their jobs better and faster, thanks to a comprehensive offer of connected services. And we will focus our autonomous work to support Delivery as a Service solutions for this segment. Last, but of course, not least, we also leverage our deep regional roots where our value is built. We have strong regions with North America and in large Europe being our primary profit engines. We are now ready to have a third engine able to contribute more than 25% of the revenue. For North America, we intend to remain the #1 in the region in profitability with north of 15% AOI margins throughout the decade. We aim to become the U.S. leader in electrification with a 50% BEV mix while reaching a market share of over 13%. In large Europe, we intend to reach #1 in the region with double-digit profitability starting in 2024, while heading to 100% BEV sales in passenger cars by 2030. For Middle East and Africa, we will sustain leadership for passenger cars and light commercial vehicles at a 22% market share. We'll follow the customer needs with our electrified solutions for further unleash our pickup truck potential. In South America, Stellantis will remain market leader achieving a stable double-digit profitability. Ram brand will continue its offensive and will further expand in Chile and Colombia, we'll be industry front runners in electrification from the second half of the decade. In India and Asia Pacific, we are now establishing a smart car platform and global powertrain production hub in India. We intend to quadruple our market share while consistently maintaining double-digit profitability. By 2025, localization Indonesia and Malaysia will proliferate volumes in Southeast Asia. And in China, we need to make some strategic moves to drive our brands profitable growth with an asset-light business model, aiming at EUR 20 billion in net revenue with enhanced brand equity and expanded independent aftermarket activities. We intend to set a new business model for Peugeot and Citroën working with DFM. Peugeot sales and distribution would be controlled by Stellantis and Citroën sales and distribution would be controlled by DFM. The DPCA manufacturing hub would be open to third parties. Second, we are implementing our one Jeep strategy with local and import business together with Stellantis control in agreement with GAC and subject to government approval. We target to have one single Stellantis-owned plant as part of an asset-light business model that greatly reduces fixed costs and limits our exposure to any geopolitical risk. Third, we plan to significantly increase our independent aftermarket activities to progress from our current fourth position. And lastly, we will also put a strong emphasis on our iconic premium and luxury brands as part of our refocus on the import business, which is highly profitable both for Jeep and Maserati. It's clear, all of our regions will grow and China will be an upside. Now let's move into the financials. As I mentioned, we designed the plan until 2030 where the first 3 years are our commitment, the second 3 years our objectives and the remaining years our directional, and this holds true for our financial targets. So let's take a closer look at the numbers. As we discussed last week, we posted record results in our first year and have built a very solid basis as we shift to become a sustainable mobility tech company. By 2030, we expect revenues will double to EUR 300 billion. As you know, we will incur incremental costs related to electrification over the next several years as we make this shift. However, we will begin to offset these costs with the new revenue streams we have discussed, such as software and connected service mobility and financial services as well as through the synergies we will continue to achieve as a result of the merger. Stellantis will manage the transition period towards electrification, while protecting our double-digit margins and maximizing our shareholder return. We are taking several actions to stabilize our industrial free cash flows one of which is to normalize and frankly reduce our negative working capital. This will not happen overnight, and will result in an approximate EUR 3 billion negative impact on industrial free cash flows in 2024. Industrial free cash flows will reach more than EUR 20 billion in 2030 due to a strong growth and profitability. We'll continue to target to be the most efficient automaker with respect to our capital spending and target CapEx and R&D around 8% of net revenues. Let's take a closer look at the drivers for our revenue growth. As I previously noted, our revenues will double to EUR 300 billion by 2030. This is the result of many factors, including our assumption that the global industry will grow by 25% versus 2021 to 94 million vehicles in 2030. Revenues will also improve with our increased BEV mix, representing a shift from 3% to over 50% of global revenue. And our software and services businesses will grow more than 800 basis points to 20% of total revenues in 2030. This includes, among other revenue streams, annual revenues from software-enabled products and services of EUR 20 billion and EUR 20 billion from parts and services. As we discussed earlier, we are also expecting revenue growth outside of North America and in large Europe, which will lead to an improved mix. Today, around 85% of our net revenues are generated in North America and in large Europe. In 2030, 28% of our net revenues will come from outside of these 2 regions including more than 25% from our third booster engine. Last but not least, there will be a positive evolution in the new car revenues for the premium and luxury brands, which, as I said, will move from 4% to 11%. Our #1 priority has and will continue to be to invest in and develop our businesses while also rewarding our shareholders. In the mid-term, we have multiple priorities as you can see. We'll continue to invest in product, technology, software, JVs, the U.S. Finco and our people. We will maintain strong liquidity and generate free cash flows that allow us to set a dividend policy with a 25% to 30% target payout ratio. In addition, we will allocate capital to be able to execute a share buyback program of up to 5% of our share count. As evidenced by our record results in 2021, we have proven Stellantis is well positioned to deliver strong performance even in the most uncertain market environments. So to wrap up. No doubt, this is a very challenging and very ambitious plan. We know there will be bumps along the way and we will adapt and push to go beyond a sustainable mobility company and bring tech that transforms our ways of working and excites the senses. The time calls for a shift in mindset, from being oriented towards what has been done before to pushing what is possible in the future while adding new business models to give our subject matter experts room to breathe; to empower them to make decisions with speed, agility and freedom; to moving our development approach from risk aversion; to instead be built on the love and excitement of the unknown, a known that overcomes fear of failure and contains it through efficient, iterative innovation and engineering cycles, where technology moves to the core of our business, governed by our customers and their needs. Ultimately, shifting from start-up production-centric to a product lifetime centric mindset. I assure you, we are proud of being a legacy carmaker with our 100-plus year tradition and history. It shows a serious commitment and ability to manufacture efficiently at scale and to design and validate for true safety. It shows our grit, perseverance and staying power. Other companies have yet to prove these things. We are now embracing a new mindset to execute on our transformation vision. Therefore, 2030 does not ask us to let go of our past, but begs all of us to become so much more than we have ever been. This is our Dare Forward, a strategy focused on the 3 pillars, all supporting our plan to achieve carbon net-zero by 2038. We strongly believe that the future of our company relies on our ability to protect the freedom of mobility with innovative, clean, safe and affordable solutions. Stellantis will deliver on these promises and lead the way the world moves. Thank you for your time. I will now invite Richard, Olivier and Ned to join me. Let's move into the Q&A session. Thank you.

Okay. Thank you very much. Thank you, Carlos. So now we'll start the Q&A session. Together with Andrea and [indiscernible], we'll manage this session. So I propose to take some questions from this room and some question on distance because we have 7,000 people connected. So we take the first question, Andrea, you locate the question to whoever you want.

Martino De Ambroggi, Equita. The first question is on synergies. Probably, I was wrong, but I would have expected higher than the EUR 5 billion you are confirming today. And what is the restructuring cash out connected, it's always EUR 4 billion? The second is more related to the cash allocation, because you are paying 25%, 30% payout. You are buying back 5%. I don't know the time span, but let's say, you will have a lot of cash, okay. We understood part will be absorbed by net working capital, change in behavior compared to the past. But what will be -- for what will be used the cash, if not for CapEx, which are always at 8% of sales? And very last on China, you are providing a target in 2030, is it possible to have intermediate steps trying to understand what is the bridge for EUR 20 billion versus EUR 4 billion?

Well, those are excellent questions. Thank you. Let me answer the question about the synergies, and then I will let Richard answer the other question about what do we do with the cash. Fundamentally, I just want to highlight the fact that if the revenue -- the net revenue is doubling, the 8% of the R&D and CapEx is going to double also in terms of amount as you of course, understand. That's one point that we need to take into consideration. But I will let Richard give you a little bit more highlights on that one. On the synergies, it's quite clear that we are always talking about net synergies, which include all the execution costs. So that's clear for you. The other thing that we need to take into consideration is the fact that as you move into the life of Stellantis, it is more and more difficult for all of us to imagine a standalone reference scenario. As we are moving in, after a few years, imagining what the standalone scenario would be is becoming more and more difficult. And I have made the decision that there is a point in time where you need to measure the efficiency of what we do through the AOI margin, the free cash flows rather than through the synergies. The synergies will continue to be always a lever for us to improve our efficiency and our effectiveness, that's very, very clear. But I don't want to talk to you about billions against references that as we enter the life of Stellantis will be more and more difficult to imagine. Because after a few years, imagining what Stellantis would be without the merger, what the FCA position would be without the merger or the PSA position would be without the merger, in a standalone position is quite difficult as you may imagine. And I want to have with you a very rigorous and very professional financial communication. That's the reason why we have decided that we would pull ahead the timing at which we would deliver the commitment of the merger, which was, as you know, well, EUR 5 billion. And those EUR 5 billion at a run rate, they generate between EUR 20 million and EUR 25 billion of value creation. And once we achieve those 5 years, then you can measure our progress on the AOI margin. And I think that what we have committed, doubling the net revenue and keeping a double-digit AOI margin as a floor is a quite ambitious commitment given the situation in which the world is right now. So that's where we are. And again, I don't want to be reporting to you synergies that against time, become more and more difficult to calculate, which means less and less rigorous in the calculation. I prefer to deliver on my commitments on the merger, 1 year ahead of plan and then let you measure the progress of our efficiency and effectiveness through the AOI margins. On the cash question, Richard, please?

Thanks, Carlos. So I think it's important to premise that clearly, our philosophy in terms of capital allocation is, first and foremost, to protect the balance sheet, maintain the investment-grade rating and have adequate liquidity, so that we can continue to execute on the extensive investment program that we have to transform the company. So clearly, that's #1 priority. And then secondly, we're looking at derisking or reducing the volatility in the balance sheet as we've discussed with some of you in the past. So -- that includes taking down our negative net working capital over time from the around EUR 13 billion. If we look at the 3 main components of working capital that we had at the end of last year, down towards 0 through the plan period. So we reduce the volatility of the cash flows, funding the pension deficit that we have and also reducing the gross debt. We finished last year with about EUR 30 billion, target is probably about half that number through the plan. And then lastly, but clearly, just as important as the other 3, remunerating our shareholders. And the dividend policy we talked about is through the period to 2025, as is the share buyback allocation. So clearly, it will be great to be sitting here in front of you in 2026, talking about increasing the shareholder remuneration because clearly this is a machine that as we transition into the second half of the decade and execute on all of these areas we talked about today, we can generate a lot of cash flow. So I think we're starting with what we believe to be a very constructive approach across the 4 areas I talked about. I think some of our competition has decided not to pay dividends. I don't think we believe that's correct. And so to your point, Martino, we will have cash flow and we will allocate it appropriately through the 10-year period, but we started off with a 5-year look.

Peter Campbell from the Financial Times. Mr. Tavares, you've warned for many years about the society-wide implications of going for electrification too quickly. Today, you've set out very ambitious targets for that. Has something changed in your mind? Or do you feel that the world is moving so fast you had to make the call today?

Well, it's because -- I'm a competitive CEO, very simply. The frame for electrified mobility has been set by the different states in which we operate. The purpose for us here today is not to express our opinion is about being competitive, making sure that Stellantis is competitive. It is quite clear that, as you know [indiscernible] [ between -- thanks to will ] and life cycle analysis, there are a certain number of differences and traps. We have discussed that at length. We know exactly where those traps are. It starts with the energy and the cleanliness of the energy. Then it continues with the infrastructure, the density of the charging network, et cetera. But we are here to compete. And Stellantis is a competitor. This is our mindset. We understand the frame. We understand the rules. Within this frame and within these rules, we are in the race. And hopefully, I could convince you today that we are in a very good position to be leading this race which is what we are working for every day. So the traps are still there. Whoever wants to listen as an opportunity discussing with us or with any other OEM to work on making sure that the traps do not happen, but the frame is clear. The frame is the states, the societies in which we operate, at least some of them, as we saw on the commitment Europe and the U.S., they want electrification. So we are going to compete and we are going to be in the race for electrification. That does not prevent us all the things I said about the life cycle analysis from committing to be a carbon-neutral cooperation, which is a very important statement. It's not about just the mobility tool. It's the full cooperation that is going to be carbon neutral, which is a major commitment to the societies in which we operate. And to the best of my knowledge, doing it by 2038 puts us in the leading seat in terms of speed to execute a carbon-neutral cooperation for Stellantis, which I'm very proud of because much of this is fully supported by our people. It's a very much bottom-up proposal that has been crafted, discussed and decided. And I think it is the right thing to do for my kids and my grandkids. So I'm very happy to be here standing in front of you to make that commitment to the society.

Philippe Houchois, Jefferies. I've got 2 questions, one for Richard, maybe in the cash flow projections that you're giving us today. I assume they include the seed funding of your captive finance operation in the U.S. I was just wondering how much that would be over the 5 years. I'm guessing EUR 6 billion, but maybe you can clarify that. And then for you, Carlos, maybe is -- I'm looking at your vision of the industry kind of goes through your plans, very ambitious. But how many of your competitors will be left standing? Are you looking at an industry that is structuring to be more profitable, we heard similar kind of vision, ambitions from General Motors back in October. Of course, the market will take a while to take the main and agree with them or disagree. But do you think there is going to be a big clear out of the industry as a result or can everybody win within no reason, of course?

Richard, do you want to start?

Yes. It's not far off. It could be a little less. So it depends how much of the receivables we decide to keep on our balance sheet, and so I mean as a function of the overall capital requirements. But I think probably a bit less over the 5 years, that really depends on how quickly we ramp up. I think we're fairly confident about the business getting its various products lined up this year and then really launching hard starting next year in terms of building the portfolio. So really exciting for the U.S. business to have a captive.

Thank you, Richard. To your second question about what's going to happen to the industry. That's, of course, a very difficult question, I would like to answer with some humility. Our purpose here today in front of you is to commit on the fact that Stellantis will be an all-weather company. I don't think that we have many companies right now who would commit on the fact that double our net revenue and that we commit on the double-digit floor for the profitability of the company over the next 9 years. It's a very strong commitment. It demonstrates our ability to adjust and adapt to a fast-changing world, to face the headwinds. And I was telling my teammates no later than yesterday, that I have been in this industry for 41 years. And I think that for 41 years, I have been moving from one crisis to the next crisis. So at the end of the day, the survivor mindset. At the end of the day, the agility to adapt to this environment, which is always very challenging, as you know, because you are the experts of this industry is a key asset for investors. And I'm sure that you have a say not only on the plan itself, the content of the plan, but also on the people and the teams that are able to face such a chaotic environment on the long run. And that's what we are trying to build. We have 40 top executive leadership team that knows exactly what I mean when I'm giving you this answer. At the end of the day, how many of us will be standing up after all of this period? Frankly, I don't know. And it depends a lot on what the stakes are going to decide on too big to fail kind of approach, who is going to be able to afford that a big car company would fail in the next few years. This is something that, of course, is as much an industry question as an economic and social question for the states in which those companies would be operating. And I cannot answer on behalf of the states. What I can say is that if you do not adapt to this fast-changing world, you are going to put yourself in a duopoly, and we have the intention to adapt. But more than that, we have the intention to have fun adapting to a fast-changing world. And this message is sent to me loud and clear by all the bottom-up proposals that were made to build this plan. Because this plan has been built with a very strong bottom-up dynamic from our people. And I think they are excited by and stimulated by the challenge. They say, okay, we have to change, we want to change, and we are going to change, which means that this plan is bringing so many different things to what we would call the 2 of us a car company that is at the end of the day, very rewarding plan to steer this change in the company. I'm very, very confident. And I'm also very proud of what our people are proposing to us because they feel that they can do these things. It's not because the top leadership team is having all of these ideas. It is because the people are proposing and sometimes I'm even cooling them down and say, "Oh, perhaps you didn't see all the headwinds, you didn't see all the bumps that you could face. So have a look at this and have a look at that." But at the end of the day, as you have noticed, I'm sure, this is very ambitious. And the guys who do not adapt disappear or put themselves in deep trouble. Thank you for your question. Next question.

[Operator Instructions] Our first question comes from the line of Breana Noble from the Detroit News. So our next question will come from the line of Patrick Hummel from UBS.

Patrick from UBS. I would have a couple of questions, please. The first one, I wonder how the segmental margin targets tie into the group guidance. Are these segmental margin targets also to be seen over the entire planning period? Or are they just 2030 targets? The reason why I'm asking is, if I simply volume weight the segmental margin targets, I would end up significantly above 10% if those were to be meant also for 2024 or the years ahead in general. So any clarification on that would be greatly appreciated. And second of all, probably for Richard, the net working capital reduction that you're expecting. Can you just explain why you're planning for this? I mean this is obviously a meaningful outflow and nothing really desirable to happen unless you tell us any different. Why do you think this outflow will happen? And am I right to assume that this is going to be a gradual outflow that will weigh with EUR 3 billion per annum on your free cash flow in the coming years rather than a onetimer in 2024?

Thank you for the 2 questions. I will let Richard answer the second one. On the first one, first, let me tell you and introduce you, Olivier Bourges, who is our planning EVP. Olivier is not only the leader that has built this plan, but also the top executive in charge of managing the programs of our company. So my answer to your question is very simple. At any point in time, we ensure full consistency between the commitments we have with you and the targets we set for each program in terms of profitability. So at any point in time, if you add up the targets that you have for each program, and of course, we embed all the synergies, we embed all the efficiencies, and we set the targets. Those targets are consistent with the commitments that we have with you. Now as we value enormously the fact that we want to protect the credibility of this management team, we surely take some provision to make sure that we are an all-weather company. That's correct, we need to take into consideration that we are operating in a chaotic world. And therefore, we cannot just add the profitability targets of each program to calculate what should be the number that we are going to commit to you. We take into consideration a certain number of scenarios in terms of custom duties, in terms of raw material costs, in terms of price of batteries where we know that part of them is indexed on raw materials. So we take into consideration a certain number of scenarios to calculate the number that we commit to you. And certainly, we protect the value of this commitment by setting some kind of provision, taking into consideration those scenarios. But at any point in time, we ensure that we can have a clear step chart from the commitment to the market to investors up to the numbers that we try to achieve when we validate and approve at the contract milestone, the new programs of the company. And this is true for every region, and this is true for every brand. So there is a commitment. There is a step chart. There are some contingencies and some scenario planning that we include in this management of the programs, which are, for the time being, the most part of our profit. But as you have seen, we are completing and complementing those profits with additional business that I explained to you today. Richard?

Thanks, Carlos. So on the net working capital, I think -- it's interesting we get criticized by some people for having negative net working capital, by others we get lauded. It's an arguable discussion. I think the fact is that we have a strong balance sheet, and we think it's a serious move on our part to reduce the volatility in the balance sheet. And that also allows us to reduce the cost of carry on liquidity, to reduce the cost of factoring, to reduce also some of the disruption in some of our planning activity as we also go more global with some of the brands that we talked about, particularly on the premium. So I think all of those things, especially if we benchmark ourselves against some of our competition as well. Our net working capital position is a little bit of an outlier. So I think we consider that over time and to your point, Patrick, it's not going to be a one-off. Over time through this plan period, we will reduce that number to basically make our cash flows less volatile and to reduce the cost of the current structure.

[indiscernible], Kepler Cheuvreux. I have 2 questions, please. Firstly, I'd like to ask whether you want to keep flexibility on [ Peugeot ]. As Peter was saying, you've been suggesting that it would be difficult potentially to get to 100% electrification so fast. I guess you probably think that we're still today, do you still have the possibility to keep ICE longer, if needed, if we don't get enough infrastructure or [ raw mats ] or whatever? And my second question is, when I see your picture of 2030, it seems to me it's going to look like a lot of what the new entrants may look like as well in 2030. So -- what -- how can you effectively try to convince investors that Rivian or Tesla in 2030 versus Stellantis, it's actually going to be a very similar business model? Therefore, it would be relatively similar multiples.

Well, that's a great question [indiscernible] , and thank you for asking that. One of the things we believe is that when some of the new entrants will start to face the challenges of high-volume production, the challenges of rigorous quality, mastering the challenge of complexity, diversity complexity, they will have to learn what we already know. Reversely, we need to learn faster than they do how to make our own business simpler, more entrepreneurial. How to give more control of technology to our teams. How to give them the ability to leverage the technology in a much faster and more efficient way. So at the end of the day, we need to learn more from them because they are doing a great job, and they will have to learn from us. So what is going to make the difference is the speed at which we are going to learn and execute each of us. Because they have their own hurdles. They know that when they reach 1 million cars or 2 million cars, they will have problems in terms of high-volume efficiencies in their plants. They will have problems in quality. They will have problems in diversity, complexity. They will have more disruptions than the ones they know today. So they have to learn that. Those are things we have learned the hard way in the past. I'm not saying we are perfect, but we went through that. And of course, we have our own experiences. Reversely, they have done a fantastic job in terms of vertical integration of some technologies and some electronic components and some software that we need to learn from and ramp up very quickly. So who is going to reach that level of expertise the sooner? That's the race, that's the race. And frankly, I would be arrogant if I was to give the result. But the only thing I can tell you today is that we are ready for the race on that front. That's quite clear.

Next question from the room.

Tara Patel from Bloomberg. Two quick questions. To what extent are you relying on government incentives to consumers to buy the EVs on which your plan is grounded? And then the second question on China. What do you mean exactly by asset light? Will you be relying to some extent on importing cars and vehicles to China?

Those are 2 great questions. On the first one, we consider that for the industry to be able to digest the 50% additional cost of a BEV against the conventional vehicle, we need around 5 to 6 years, which means that we also assume that through the next 5 to 6 years, there will be some kind of support from the states as they are ramping up on their infrastructure investments for the charging units as an example. So we consider that there is a transition period over the next 5 years, where we need to do an important job in terms of productivity. And while we are doing this job on productivity and the volumes are scaling up, the governments need to continue to support, and we understand that they will reduce progressively their support because they cannot afford it. And the citizens will have to pay more taxes if they keep on doing it too much. So it's a transient mode for the next 5 years where we need to digest the additional cost of electrification, including through additional volumes, while there is -- there will be a progressive decrease of subsidies from the government. On your second question about China, what we mean by asset-light means first, that we do not carry an excess of manufacturing capacity. That is, of course, making things very difficult in terms of profitability for our JVs. As you have seen through our communication, on the first JV with GAC, where we agreed that we would take a 75% share in that JV, and we are now waiting for the Chinese government authorities approval. We kept one plant only. We only have one plant in this JV, which means we plan to use that plant with a reasonable capacity utilization ratio. So when I'm talking about asset light, I'm talking about that. I'm talking about the fact that we don't saddle the business model with excess capacity that we cannot use because our sales and marketing power does not allow that to happen. In addition to that, your statement is correct. We see that our CBU business is doing well. Quite profitable with a very sharp marketing and a very sharp brand positioning, specifically on Jeep and specifically on Maserati. So there is nothing wrong about having a highly profitable CBU business even if the volumes may not be as big as the CKD ones. Because we also need to think about the exposure of the company to geopolitical tensions. So our strategy is quite clear. We want an asset-light strategy, which is not saddled by excess capacity, and within which we can control not only the positioning of the brands, but the marketing communications and the distribution models of our products. And if it has to be through CBU, then it's fine because it's highly profitable, and it's a good opportunity for the company to improve its own results. So that's what we mean with those comments. Thank you. Next question.

Charlie from Redburn. So I had a few questions about the electric Ram pickup that you mentioned. Firstly, obviously, we've seen competitors have to increase their capacity targets for their electric pickups a few times. So would you be able to share with us what in your budgeting you have assigned for capacity for that electric pickup in say 2024 or 2025? Secondly, you mentioned that you expect it to be market-leading on all the important metrics like range and charging time. Do you include within your peer group, the Tesla Cybertruck in that? And then thirdly, I think Ford and GM, they took orders about 12 to 18 months before start of delivery. Should we expect the same from Ram, which would, I guess, will be sort of early next year.

Well, those are 3 great questions about the BEV pickup. Are we going to open the orders before we launch the product? Yes. And the brand CEO, Mike Koval will decide that. He will decide when it is appropriate to open the orders. But certainly, it will happen before -- significantly before the SOP most probably. When we talk about the competitive set to which we compare ourselves, yes, the Tesla Cybertruck is in that competitive segment, of course, as much as the Rivian -- as much as the Ford, as much as any other BEV pickup truck competitor. When we talk about competitiveness, we are talking about a package of 4 major KPIs that I mentioned: towing, payload, charging speed and range. And talking about that package, what we are now building, it's highly competitive. And it has to because, as you know well, we are not the first ones to launch the BEV pickup. So it is our problem, and it is our opportunity at the same time. Our problem is we are not #1. Our opportunity is, we know more about the other guys. And then we have a better opportunity to beat them with the engineering that we are currently producing. And we have spent enormous amount of time using the STLA Frame platform to upgrade what we were doing, and that has been, I think, a very rewarding experience for all of our product people, technology people, program people, engineering people, brand people. There has been a very intense discussion, very exciting. It's highly competitive, and we are ready for the fight. Of course, we have to do things in the right order, with the right quality, with the right focus, the right rigor, that's why we'll come in 2024. But we are excited by the fight. And as you see in our metrics in 2021, we increased significantly the market share of Ram in the U.S. because the product is very well received by the market. And not only we have a pure BEV version, but we have a few other things in our pockets that will surprise the market, but it's still too soon to talk about it. So give us a little bit more time. Thank you.

So we take the next question from the room.

[indiscernible] Carlos, where I could put the light commercial division? Would it be at the level of the brands? Would be at the level region being a multibrand and multi-region division? That's question number one. And question number two, in one of the final slides of how the range will appear in 2030? Global SUV, it's something that comprise only Jeep or more than that?

Thank you [ Luca ], On the second question, global SUV is Jeep. On the first question, this is going to be a worldwide business unit, taking care of all the markets, all the brands, all the products, mostly vans and pickup trucks, as you may understand. So it's a global entity. It's an LCV division, worldwide division that we want to empower and to whom we want to give more breathing space. We reached this conclusion by just looking at the number of exciting things that they can do. Not only on the technology side, you saw the BEVs, you saw the fuel cells. You saw the specific features for the last mile deliveries. You saw the opportunities on the vans, the opportunities on the pickup trucks. So it's a huge business with a huge growth and profitable growth potential. And I don't want them to be somewhere slow down by the rest of the company if that was to happen. So if I want that to be unleashed, the better way is to give them a dedicated P&L, dedicated plants, dedicated autonomy in terms of management, making sure that they can unleash their full potential. That's the idea. And of course, we will keep you and all of you updated on how we are going to organize and who is going to be assigned to that position. Certainly, it's an exciting business with a lot of potential to grow. And as it was said, we want to be #1 on that one. Thank you, Luca. Next question.

Our next question comes from the line of Breana Noble from The Detroit News.

Thank you for taking my question, apologies for the technical difficulties earlier. I was wondering if - to get clarifications to just reflect to the 2038 carbon neutral goal, assuming that means that [indiscernible] are projecting 100% battery electric vehicles by then, if you could get that clarified, I'd appreciate it. And then with respect to that, -- what does -- I was wondering if you could characterize what that exactly means in terms of possible investments in the future for the ICE side of the business? Will there be further investments into internal combustion engine vehicles? And then just with respect our business in China, I know the presentation mentioned one target plant. Stellantis previously had said its commitment to not closing any plants because of the merger. So I was wondering if you could help us sort of square that with that commitment.

Sure. Well, thank you for your 3 questions. Let me start with the third one. China has been a problem for former PSA and former FCA. So the merger did not change the fact that something needed to be done to improve the business case of the 2 former companies in China. So we are moving to fix it. That's what we have been doing this year. And the results are quite positive for the first year, as we have reduced by around 50% of the red ink we had over there. Now as we have been experiencing so many frustrations, we start to understand what went wrong, and we are trying now to set up a business model that carries the lessons that we have learned the hard way. So it's nothing related to the merger. It's just the possibility to gather the experiences of the 2 former companies to make our understanding more robust of what needs to be done to be successful. So it's completely disconnected from that. Of course, as Stellantis perhaps that our negotiation power is better than it was before as one single company on the standalone perspective. That's one point. Second point I wanted to highlight is that the carbon-neutral commitment by 2038 as a corporation is a very, very demanding target. I think we are by far the #1 in terms of committing to such an early date for being carbon neutral. I think it makes total sense to accelerate the fixing of the global warming issue. And that's where we feel good about because it's ethical, it's very ethical. It's not driven by regulations. It's not driven by top-down decisions. It's just driven by bottom-up ethical behavior of our people, ethical behavior of our top leadership team. So we feel good about it. And perhaps, Olivier, you want to add something to the road map that you have built with the teams.

Yes, sure. Thank you, Carlos. I think it's, as you said, very ambitious. It's a daring objective, but it's what we want to achieve. And we are going to have to activate all the levers, all the levers because there is no one single silver bullet to achieve this 0 net carbon in 2038. All the levers meaning, of course, Scope 1 and Scope 2, as far as we are concerned, we are going to activate everything starting with -- I would say, decarbonized energy in all of our facilities. But on top of that, we need also to achieve on a well-to-will process as much as possible the zero emission, which is going to activate not just BEVs, but also all the zero emission vehicles we are going to -- and we have also talked about the fuel cell vehicles. We may also want also to pursue and to proceed with on some segments, in some regions with fuel cell vehicles. We have also, in some regions, some countries like in South America, I know very well, the flex-fuel energy with the bioethanol, 100% ethanol, which is sometimes also close to zero emission. So we're going to have to use each and every technology. And on top of that, we are going to have also to collaborate very closely with all stakeholders, starting with of course, our suppliers. We need a full, I would say, collaboration with our suppliers to get the best of the decarbonization-- of their own processes, their industrial processes. At the end of the day, we also mentioned that we need a key number to achieve this target, mainly and namely specifically the energy mix in each and every country. We need an energy mix as close as possible to zero in terms of carbon emissions, it is something which is absolutely key and for which we are also relying very much on what all the governments all around the world are pledging.

Thank you, Olivier. Let me answer the third question, which was about the ICE, when is the ICE going to stop? Fundamentally, it's going to stop through the regulations. The regulations are driving the end of ICEs. As you know, if we take the example of Europe, there is an ICE ban that has been decided. Some countries have decided to anticipate the ICE ban. And that's what we are preparing for. What will happen in the U.S. is going to be, of course, paramount for our strategy. So far, we don't clearly know. But of course, we are driving the business and we are managing our plans and our teams on this matter based on the regulations and based on the bans that will be decided by the governments. That's the #1 driver. As long as it makes sense to improve the CO2 emissions through ICE and electrified ICEs, there is a play that could be done, which is to continue to sell mild hybrids that will take out of the road clunkers with more than 12 years of age. And as you may imagine, those clunkers with more than 12 years of age, they have more than 160 grams per kilometer CO2 emissions. And somebody may want to protect affordability and to sell mild hybrids at an affordable price to replace 160 grams of CO2 per kilometer vehicles by 100 grams per CO2 -- per kilometer CO2 vehicles, which would create a big impact in terms of improving the planet and contributing to fixing the global warming. But that's not the direction that has been selected by most of the countries. The direction is full electric. So we go full electric. And then the ICE will be the result of the regulations and not our decision. It's the regulations that will decide, but we are ready as you saw in our commitments to move our sales in Europe up to 100% BEVs and to move the sales in U.S. up to 50% of BEVs by 2030, which is a very significant commitment. As you saw, for that, we need 400 gigawatt hour of battery supply, 400 gigawatt hour. So you can calculate how many gigawatt hours the automotive industry will need by 2030. And then you can calculate how many battery plants we need and how many are under construction. That's an interesting calculation that I would suggest to you all. Thank you for the questions. Let's move to the next one.

Next question's from the room.

It's Henning from HSBC. Richard, I just had a question of clarification really about that working capital impact again. You said it's a multiyear outflow. But did you mean the EUR 3 billion is spread over multiple years? So we get a EUR 3 billion impact over multiple years, adding up to a double-digit figure in terms of capital allocation for the working capital? And can you speak a little bit about where you see that coming from? I understand you want to reduce the volatility in the balance sheet and the cost of factoring, for example, but does it include things like having higher inventories, for example, to support a direct distribution approach or -- and -- could you speak about the payable side and the lack of offset of higher inventories as well?

It's a multiyear activity. Obviously, no one's ordering us to do this. So we'll do it opportunistically depending on how the business is performing on the one side. On the other side, to your point, as we go and transition at different speeds in different regions, maybe to different mix of distribution, then that will also impact our working capital. If we -- if you think about a direct sale, clearly, that inventory remains on our books for longer than it would do in the current model. So that's also an aspect. So I think -- yes, I think about it in as much as we need to, in my opinion, reduce that number. There's a reason to reduce it from a volatility point of view and a cost point of view, as I said earlier, as we stand today. And then the business model will change and that will also reduce it just structurally to some extent. So -- and like I said, it's over the whole period of the plan we're looking at here. So it's not going to be necessarily large numbers every year. I think it's going to -- just going to be something that you need to be aware of because I think it's important for us to do that transparently. So I don't think there's a drag on our performance, which you now understand.

The EUR 3 billion [indiscernible]

No the EUR 3 billion is specific. No, it's not each year, but in that particular year because we have potentially both a reduction in the working capital because we're reducing the volatility and some transition to more -- some more direct distribution in the European area, then we get a larger year potentially than we will have in general.

I think you will be reassured if you think about what is the current negative amount and you spread it through the 9 years, that will reassure you. Next question, please.

[ Nick Gibbs ]. I have a question about -- you said you're going to reduce distribution costs by 40% by 2030. I mean that's a big target. You also mentioned the move to direct sales and which will then add stock onto your books. So can we foresee a big shakeup with retail within that period to get to that 40%. And how will retail look when it comes by 2030?

It's a great question. And -- what I can say to that topic is that we are currently discussing that with the European dealer associations, I consider this as being a regional topic, which means we can have different solutions depending on the region. But of course, we need to look at the facts. The facts are that the distribution costs are very high. We need all as an industry to fund electrification and we need to find a way to improve the customer satisfaction. We know that there is room to improve the customer satisfaction in terms of service. There is the need to reduce the costs to fund for electrification. And of course, each region has a different regulatory framework and different ways of going to market, which means that we will discuss this on a regional basis. So far, we are discussing this with our European dealer associations. I think that discussions from what I see in the minutes of those meetings are going very well, very constructive, very open-minded. I think that with our partners, we see that improving the service quality is a must. And that facing this extraordinary cost increase of electrification, we need all to bring the best ideas we can to make this reality and to ensure affordability because if we make purely these reality, but nobody can buy them, we are not going to fix the global warming issue. So if we want to fix the global warming issue and bring our fair share we need not only to bring the products to the market, which we are actually doing, but we need also to make sure that they remain affordable for our customers to be able to pay for them. That's exactly where we are. And so far, I can only testify that it's moving well and very smoothly and very constructive, but it's a regional topic that we are going to address region after region in a way that is going to be calm and looking at what is the best for the planet from one side and for the customer for the other side. Thank you for your questions. Let's move on.

So time is running, we take the last question from the room.

It relates to the revenue assumption that you provide. I mean we don't have a forecast for '27, 2030 right now, but we have got a '24 forecast. And I realized that the consensus goes for something like EUR 185 billion of revenues, and you were targeting EUR 200 billion. So I want to understand what is the assumption behind this EUR 200 billion target? Is it on revenues per unit? Is it market volume? Is it market share gain? And what if the revenue target will not be achieved, because my experience since 2014 is the disappointments happened mainly on the top line, right? So what happens if you don't achieve the EUR 200 billion? Isn't operating margin going to be lower? And then also on the CapEx target, is the CapEx ratio going to be higher if the revenues are lower than expected?

It's a great question. As you know well it is easier to grow the revenue number than the volume number. So think about that. That's the direction, which means, of course, it's a combination of different factors, and I will let Richard give you a little bit more insight. It's a combination of per unit transaction prices, which are going to be higher because they will be higher with the electrified technology at one point in time. So the per unit numbers are going to be higher. You have much more other revenue streams than just sales of new cars, as you have seen through the other businesses that we have commented to you. So many other businesses are service-driven that is going to add. You have seen that we have also a very good ambition on the parts and service business. So it's a combination of different factors. And I think there is potential to grow the revenue. And we have no intention to push the metal. For the time being, there is no metal to be pushed because there is not enough supply anyway. So the question is not even there. So what happens, I don't know, we'll see. For the time being, we can only try to commit on the things that we can envision. But we see where we are going. That's the important point. We see exactly where we are going on a 9-year time window, which is quite daring given the chaos of the world right now. So that's what we are offering to the investors is an all-weather company with a clear direction and with an ability to deliver commitments on a 3-year leg and then a second leg and then a third leg, that's what we are doing. But I don't think that is going to be the major problem for us, the revenue. I think it's all about the execution that needs to be very focused, laser-focused on each of those opportunities. But to give you more details on the revenue, Richard, perhaps you can elaborate.

I think you've said it very well, Carlos honestly. And I think just to go into more detail would be...

Inappropriate.

A bit crystal ball, fashion at this stage. I think what's important, I think, is that as we said, we are focused on margin value creation and an all-weather type approach, yes. So we don't build our organization based on massive revenue growth. We build our organization based on value creation and being ready for shocks in the marketplace. But I do think that we're in a situation at the moment because of constraints that supply-demand function is unusual. I do think that that's likely to return to some more level of normality in the sort of timeframe we're looking at, which also will have effect on our overall volume equation, I think.

Perhaps we should take 2 or 3 more questions because I see that many, many people still want to ask questions. So if we still have some time, I don't want to frustrate the people here.

So we're about [indiscernible] so we have to take a question from the room. I will just get the mic. Sorry for that because we -- I said it was the last question, but we will get the mic.

Steve Reitman from Societe Generale. My question is to Ned. Obviously, you experienced at Amazon and before the Toyota. What can you talk about your perception of the technical competence that you've now found at Stellantis, how quick moving is it? And how does it compare to tech companies?

Thanks. Great question. I actually find Stellantis quite compatible to how tech industry -- Stellantis is a technology company. Car companies are technology companies. When you get in a plane and you see how much tech is there, it's quite amazing. I think what's happening, what we're doing right now is accelerating our transformation in areas where we don't have strong capabilities, software electronics, vertical integration, customer experience end-to-end, removing the friction focusing on the customer differently than where we have done, transitioning to lifetime of the product and customer -- lifetime of a customer versus transactional business, those sort of things. I think there were good table stake capabilities, but I was exceptionally impressed with the quality of engineers. There's a bit of a I'm a shy engineer inside the car company, especially in Stellantis. They're phenomenal engineers, but they lack that sort of I want to say, hunger and maybe even exposure to new tech companies that say, well, we can go faster, we can change processes. We can be a little bit more agile. So building the processes, teaching engineers with new methodologies, equipping with the new tool chains, thinking a little bit differently, adjusting that has been a focus last couple of months, and it's just a great response by the engineers, whether it's on electronics side and the software side. The ramp-up is very good and pretty impressive how quickly smart people and the adoption has been really, really good.

Thank you, Ned. Thank you. That's an important answer. Second of the last 3 questions. It's going to be difficult for them to select.

[Pierre Ridenour] Il Giornale from Italy. Good afternoon. Sorry, Mr. Tavares. What can you say about Italian factories? And how you intend to develop them? Second, this is a plan B in case Fit for 55 of Europe changed with a greater balance between electric and new green fuel, synthetic fuel?

Well, thank you. Those are 2 great questions. No, let me answer. First I think that when we are committing to 2038 carbon-neutral cooperation, we are ahead of Fit for 55. We are ahead. So we don't expect to be -- always be pushed on the back. We want to be in control of our destiny, and we want and I want to do the right things for my grandkids. So this is not about being constrained. This is about being proactively doing the right things where we contribute in a significant way to fixing the global warming issue from one side, and we protect the value creation for our investors on the other side. And I think the numbers are demonstrating that. So yes, it's challenging. Yes, it's ambitious. That's what we are here for. That's point number one. To your second question about the Italian factories, I could give the same answer for Italy, for France, for Spain, for Germany, for any European country. The driving factor is the size of the market. Because we have enough brands, enough nameplates, enough investment to protect, if not grow our market share in the European market as much as in the North American market as much as in Latin American market. So we are not in a defensive position in terms of product, brands and technology. We are on the offensive. So as long as we are on the offensive, we can expect that our market share will be, if not growing, at least at the level that we have today. So if we are there, there will be transformation in the plans to go more on the electrified direction, but it's going to be fun, and it's going to be exciting because we are building a new mobility -- a clean mobility that did not exist before. Now the real problem is not with Stellantis. If there was to be a problem, the real problem is the size of the market. The size of the market in Europe is driven by what? By constraints on the usage of the automobiles, which is a question that has to be addressed to the political leaders, not to the CEOs of companies like Stellantis. We bring the technology. We bring the models. We bring the brands. We bring the focus. We bring the passion and we get the job done. Now if Europeans cannot use their cars, to decide on Saturday morning where they want to spend the weekend then that may have an impact on the size of the market. As you know, right now, the European market is a 15 million passenger vehicles and LCVs. Pre-COVID, it was 18 million, 1-8. So we moved from 18 million down to 15 million. So the real question about any plant in Europe, starting with Italy is how good are we in the European Union at protecting freedom of mobility through safe, clean and affordable mobility that can be supported by the states to protect the size of the market. If the size of the market is around 18 million, it's fine because we will make our share. Now if the market continues to drop, it's not a problem for Stellantis only because we are at 50% breakeven point. It's a problem for the whole industry. It's a problem for Europe because Europe needs industry right? Europe wants a strong industry. And there is no other more technology-driven industry than the automotive industry. So if we want to protect technology, know-how, highly skilled and highly trained engineers, we need the most technological industry that we have in Europe, which is the automotive one. And therefore, I'm just here saying that we need to protect the size of the European market, and we will do our share and only good things will happen. That's the answer I would like to give you. Thank you for your great question. Let's go to the last one.

José Asumendi from JPMorgan. Just a couple of topics, please. Can you talk about becoming a leader in commercial vehicles in North America. What does it mean for your product launches, for your CapEx? It looks like a very promising topic. And second, can you talk about why you chose Foxconn versus maybe Qualcomm and NVIDIA? What does this mean for Stellantis? And what are the advantages or flexibility that the partnership with Foxconn brings to the group?

Thank you, José. I'll take the question about LCVs and Ned if you -- if you will, please take the second question on the technology partners. On the LCV, what we see today is that we could sell much more. We have a couple of capacity bottlenecks that we can solve. We see that there is a significant possibility to better leverage. The winners that we have in one region to make a better job in another region. So there is a lot of synergies in product and market understanding that we can leverage. Let me give a very simplistic example. If I'm developing a specific feature for the last mile delivery for Amazon in the U.S. market. Why wouldn't I propose that specific feature to other markets? And why wouldn't Amazon use that specific feature in Europe also or even other logistic companies. So there is a lot of things that we can move around to create synergies across different markets. We see that the potential of Ram is enormous, not only in the U.S. where our market share has been growing but also Latin America, it's just obvious. Africa, Middle East, GCC, it's obvious. You just have to bring the capacity and to bring the products. So we have -- we are not short in terms of appeal, models. We are just in a position where we need to focus more on removing those bottlenecks and hoping that there will be enough semiconductors in the near future. As soon as that happens, we have the products, we have the technology, we have the ideas, we have the leadership. And we are going to create this autonomous entity to make sure that they have the breathing space to get on with their business entrepreneurial ambition which is what we are trying to create. Ned for the other question, please?

Thank you, Carlos. We like our relationship with Foxconn, they are agile, they are fast, their price performance per unit is fantastic. But that's not the only company we're going to partner. So stay tuned to some additional announcements in the future in areas where we need additional help on the electronics side.

Thank you, Ned. Well, I think it's done. I would like just to conclude this session by expressing to you all my sincere thanks. It was my great pleasure and I'm very sincere to tell you that I enjoyed the whole day speaking to you this morning and this afternoon, listening to your questions and certainly thinking about your questions to make an even better job in the future for our company. I very much appreciate your support. I want to tell you that each time you are asking a question, we take it very seriously, and we try to understand what we could do better from your question. We are a learner and a learning company. We are agile. We want to move, and we are moving with the blessing of our people. Our people want us to move, and we are moving with them, which I think gives this company a very, very bright future. I'm very confident, and I'm looking forward to discussing with you again very, very soon. Thank you for attending. Have a great day. Thank you.