Are the two parties unwilling to merge? The epidemic may deepen the failure of the PSA-FCA deal?

On March 26, PSA Group CEO Carlos Tavares had an ambivalent attitude towards electric vehicles. He once said: “We will sell electric cars to environmental enthusiasts.” And FCA has been reluctant to invest in electric vehicles.

But the planned merger of PSA and FCA would allow the two companies to share the development costs of electric vehicles and eventually offer electric vehicles globally. But it now appears that talks between the two sides to seal a merger are under threat from the coronavirus pandemic. After the merger, PSA and FCA will create the world’s fourth largest automaker. The combined company will have 14 brands including Peugeot, Citroen, Opel, Fiat, Alfa Romeo, Maserati, Jeep and DS.

It is understood that the deal, which is scheduled to be finalized in early 2021, is facing challenges brought about by the epidemic. An internal source said: “The development of electric vehicles requires large-scale investment, so the two groups need to complete this merger. , but they have to recognize that in the current economic climate, the merger will require a review of the original financial terms.” The COVID-19 pandemic has shut down auto manufacturing plants in Europe and the U.S.

The United Auto Workers (UAW) revealed that two FCA factory employees have died after contracting the new coronavirus. Karl Brauer, an analyst at Kelley Blue Book, said PSA and FCA now need to reconsider the financial terms surrounding the merger. Basically a reassessment is now required.

A PSA spokesman told AFP that the merger between the two parties still makes sense and it would be inappropriate to speculate on whether the agreement will change. The decision to merge was announced in October last year, so the two companies may have already Thinking about how to expand the production of electric vehicles by integrating resources.

In 2018, Tang Weishi said that all of the company’s models would be electrified by 2025. Two years later, PSA has only announced sales of its only electric car, the Peugeot 208 EV with a 50kWh battery. However, Thompson believes that PSA is on track to meet its EU emissions targets for 2020-21.

In contrast to FCA, in the European market, in order to meet EU requirements, the company needs to buy credits from Tesla. When it comes to developing electric vehicles, FCA does not have a well-planned plan, so a merger with PSA could theoretically be a huge help to the group. Tang Weishi previously said that after the merger, its electric vehicle batteries will come from two factories jointly established by it and Total.

In the US market, FCA may launch two more electric vehicles. Currently, the company only sells a plug-in hybrid version of the Chrysler Pacifica as a new energy vehicle in the US.

FCA is likely to launch a longer-range 500e in the US as well as a Centoventi pure electric Model with a unique external battery design. However, PSA’s Jeep brand, which is famous for its four-wheel drive off-road vehicles, may be more in line with the appetite of American consumers. The company’s five-year plan includes four pure electric vehicles and 10 plug-in hybrid models by 2022.

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