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Stellantis (STLA) to Invest $155M Each in Two New Projects

Stellantis STLA became McEwen Copper’s second-largest shareholder after acquiring an equity stake of 14.2% for $155 million in McEwen Mining’s subsidiary. McEwen Mining owns the Los Azules project in Argentina and the Elder Creek project in Nevada. Starting in 2027, Los Azules targets producing 100,000 tons per year of cathode copper.

Copper is a crucial raw material for the future of electric mobility. In the coming years, the demand for conducive metal is expected to increase several folds. Los Azule is one of the top 10 international projects in the development of copper and by making this investment, Stellantis will be able to meet its projected copper demand starting in 2027.

Through this investment, Stellantis intends to become an industry leader in achieving carbon net zero by 2038. Stellantis is taking crucial steps in Argentina and Brazil to ensure the long-term supply of copper and other raw materials necessary to fulfill the company’s global electrification plan.

Stellantis also announced plans to invest $155 million in Indiana Transmission, Kokomo Transmission and Kokomo Casting Plants to localize the production of a new electric drive module. The electric drive module (EDM) consists of three components that are combined into a single module to achieve improved performance at a low cost.

The module will be integrated in more than 25 battery electric vehicles, scheduled for launch between now and 2030, designed on the STLA Frame and STLA Large platform. Due to its optimized efficiency, this module can help each platform achieve a driving range of 500 miles (800 km).

After making a successful shift toward a decarbonization strategy in European operations, Stellantis gears up to lay the same foundation in the North American market. By combining the benefits of innovative battery technology, a BEV-centric platform and a new EDM, Stellantis will be able to offer its customers a variety of EVs with exceptional performance at affordable prices.

The investment aligns with the company’s objective of reaching 50% of U.S. electric-battery vehicle sales by 2030. The progress toward the target will start in 2023 with the first fully-electric Ram vehicle and in 2024 with Jeep.  

Since 2020, Stellantis has invested a total of $3.3 billion in Indiana, including its recent announcements of $643 million in a gigafactory joint venture with Samsung and the production of a next-generation eight-speed transmission and new engine for PHEV and conventional applications.

Moreover, as part of the Dare Forward 2030 plan, Stellantis aims to achieve a significant electric vehicle sales mix in Europe, the United States and Brazil by the end of the decade. All these investments will help the automotive manufacturer reduce half of its carbon footprint by 2030 compared to 2021 and achieve carbon net zero by 2038.

Zacks Rank & Key Picks

STLA currently carries a Zacks Rank #3 (Hold).

A few top-ranked players in the auto space include Bayerische Motoren Werke BAMXF, Wabash National WNC and Modine Manufacturing MOD, all sporting a Zacks Rank #1 (Strong Buy).

Bayerische is a multi-brand automobile manufacturer that focuses on the premium segments of the worldwide automobile and motorcycle markets and has three brands: BMW, MINI and Rolls-Royce. The Zacks Consensus Estimate for BAMXF’s 2023 sales implies year-over-year growth of 1.88%.

Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimates for WNC’s 2023 sales and earnings imply year-over-year growth of 13.06% and 24%, respectively.

Modine operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. The Zacks Consensus Estimates for MOD’s 2023 sales and earnings imply year-over-year growth of 11.43% and 43.09%, respectively.

You can see the complete list of today’s Zacks #1 Rank stocks here.


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