Higher interest rates mean ‘free money’ is over
Stellantis CEO Carlos Tavares said on Wednesday that the changing economy will have implications for the startup world and prove the value of the company’s bet on them this year.
Tavares made his comments during an online awards announcement to highlight the company’s partnerships with startups.
Because governments are raising interest rates to fight inflation, access to finance won’t be so easy for startups in the future, according to Tavares, who said the situation is a result of the ” additional monetary mass that has been put on the market”. “
It’s apparently a reference to efforts by governments to tackle the economic toll of the coronavirus pandemic, for example by delivering stimulus payments to individuals.
The “free money” period will disappear as interest rates rise, he said during a company webcast.
“If we raise interest rates, the free money is used up, which means some startups will have a little more difficulty growing,” Tavares said.
Earlier this year, Stellantis announced the creation of a $302 million (€300 million) venture capital fund. The company said it will invest in early-stage and late-stage startups in the automotive and mobility sectors.
The company said it had two goals: find businesses that would be financially viable and, more importantly, customer-focused. The effort is designed to enable the company to find innovative technologies that can be developed faster than through traditional automotive industry processes and help the company achieve its goals, as outlined in its Plan Dare the future 2030.
On Wednesday, Tavares said Stellantis had signed 40 different deals with 40 startups, and the company announced the finalists for what it called its 2022 Stellantis Startup Awards, highlighting seven notable deals it works with in areas ranging from customer service to supply chain improvements to “agility and efficiency.”
The finalists have participated in operations in different parts of the globe, including Brazil, France, Turkey and the United States, where an emergency alert system to warn drivers of road hazards in real time is being “prototyped” on Jeep, Ram, Chrysler and Dodge vehicles, according to a press release. Each received a non-fungible trophy, or NFT, which was described as “an artistic rendition of intertwined hands expressing the concept that in turbulent times, ideas prevail.”
One of the startups featured was Phygitall, under the Industry 4.0 heading. The startup has developed a system that has been deployed at Stellantis’ engine plant in Betim, Brazil. Employees would wear smartwatches to “analyze the pattern and intensity of hand movements to optimize the manufacturing process, increase safety, quality and efficiency,” a press release said.
According to a presentation on the process, it compared how workers operated on different shifts at the factory.
Ned Curic, Stellantis CTO, said Stellantis officials have learned the company can save a lot of time on a range of tasks in a manufacturing plant. The company had an idea of this before, but had no way to measure it.
“I think it’s an area of immense transformation where we can do the same tasks much faster,” Curic said.
In response to a number of questions about how employees in Brazil have reacted to the technology and whether it will be implemented in the United States, Tavares spoke of the need for the company and its employees to be ready to to change.
“The employees are very, very thoughtful people. They fully understand that if we don’t change, we disappear,” he said.
Tavares said the company’s larger scale following the merger that created it early last year will help it navigate the changing automotive landscape and manage the necessary investments, but that internal change is also needed.
“They understood that in the Darwinian world, if we don’t change, we disappear regardless of our scale…but scale helps dilute the huge investments we have to make,” Tavares said.