Prior to the electric vehicle strategy activity, Stellattis marks a favorable profit margin Reuters

MILAN (Reuters)-Stellatis softened investors’ attitudes ahead of Thursday’s electrification strategy, suggesting that although chip shortages have hit global automakers, it will start better than expected in 2021.

Stellantis was formed in January by the merger of Italian-American automaker Fiat Chrysler and France’s PSA, facing a desire to understand how it plans to launch a series of electric vehicles (EV) to compete with Tesla (NASDAQ:) Investor community.

On “Electric Vehicle Day 2021” starting at 1230 GMT, Stellattis will disclose major investments in electrification technology and interconnected software because it aims to become an industry leader, it said in a statement.

In April of this year, CEO Carlos Tavares stated that by 2025, it will provide low-emission versions — battery or hybrid versions — for almost all European models. By 2030, they will account for 70% of sales in Europe and 35% of sales in the United States.

Stellantis owns 14 brands, including Jeep, Ram, Opel, Fiat and Maserati.

In a similar electric vehicle strategy event last week, European competitors Renault (PA:) announced that by 2030, 90% of its main brand models will be fully electric, after it had previously included hybrid vehicles in its goal.

Stellantis said that although the global semiconductor supply shortage has caused production losses, its adjusted operating profit margin in the first half of 2021 is expected to exceed its annual target of 5.5% to 7.5%.

At 0800 GMT, the automaker’s Milan-listed shares fell 3%, lagging behind the European auto index, which fell 2%. Analysts at Jefferies (NYSE:) said that Stellatis’ update of profit margins is very good, but it has been expected.

The automaker said that aggressive pricing and product mix helped it expect “strong profit margins” in the first half of the year.

“The global Stellatis team has also reacted strongly to the production restrictions caused by semiconductor shortages and implemented very effective cost control measures,” it said.

Stellantis said that the industry’s free cash flow is expected to be negative in the first half of the year, which is also due to the negative impact of lower production than planned, which is consistent with previous forecasts.

However, it stated that the synergy from the merger is expected to exceed the target for the first year and will help bring positive cash flow throughout the year.

Stellantis is committed to generating synergies of more than 5 billion euros ($5.9 billion) per year.

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