The world's No. 4 carmaker, formed in January from the merger of PSA and Fiat Chrysler (FCA), said higher prices and cost savings were boosting profitability, with first-half margins at FCA's old North American business hitting a record high.
"You can see his hand in these results, synergies he has realised in just six months are conspicuous, he's doing an excellent job," Bestinver analyst Marco Opipari said of Tavares.
Stellantis said it was now aiming for an adjusted operating profit margin of around 10% this year, compared with 5.5%-7.5% previously.
The company, whose brands also include Citroen, Dodge, Jeep and Maserati, said it made around 1.3 billion euros ($1.5 billion) in merger-related net cash savings in the first six months of the year.
Its Milan-listed shares rose as much as 5.3% and were the best performer in Italy's blue-chip index.
"It's the least we could say to say that Stellantis had a strong start on H1 2021," Tavares told analysts on a conference call. "You have in front of you a very happy CEO."
He added that Stellantis was "still a baby company" and Chief Financial Officer Richard Palmer said he was confident the group would reach its long-term goal of 5 billion euros in annual savings, and it aimed to achieve 80% of them by 2024.
The new margin forecast assumes no further deterioration in the global semiconductor shortage that has been affecting the whole industry, and no further pandemic lockdowns in Europe and in the United States.
Last month, Tavares warned the semiconductor shortage would drag into next year.
On Tuesday, calling the shortage "the big gorilla in the room," Tavares said he expects to see some improvement in chip supply in the fourth quarter after difficulties in the current three-month period, but visibility remains poor.
Palmer said the group expects a total projected production loss of around 1.4 million vehicles in 2021.
He added a spike in raw material prices was also a challenge, with its impact felt more in the second half.
In January-June, Stellantis' pro-forma adjusted earnings before interest and tax (EBIT) totalled 8.62 billion euros, topping analysts' average forecast of 5.94 billion in a Reuters poll.
Pricing contributed almost 4 billions to first-half EBIT.
Bestinver's Opipari said lower production due to the chip shortage helped the group to keep prices high and boost margins.
"With a constrained vehicle offer, they did not need to make discounts," he said.
The carmaker reported an EBIT margin of 11.4% in the first six months, with North America at 16.1% due to record pricing for such vehicles as the Ram pickup.
Tavares said North America and Europe were "two strong engines ... pulling the company forward."
Pro-forma industrial free cash flow was a negative 1.16 billion euros, "reflecting negative working capital impacts due to unfilled semiconductor orders, offsetting positive net synergies," it said.
In a another sign of efficiency gains under Tavares, luxury brand Maserati reported first-half adjusted operating income of 29 million euros after two years in the red.
Regarding China, Tavares said Stellantis was moving "very well" toward a "deep change" in strategy and was still finalising a few discussions. The new strategy will be in place by the end of the year, he added.
He also said the automaker was "all in" on the rollout of electric vehicles (EVs) and would introduce 11 new pure EVs over the next 24 months, bringing the total number to 22 at the end of the period.
Tavares said Stellantis is setting up a software division and would outline that strategy later.
($1 = 0.8417 euros)
(Writing by Giulio Piovaccari and Ben KlaymanAdditional reporting by Giancarlo Navach and Stephen JewkesEditing by Tomasz Janowski, Mark Potter and Nick Zieminski)
By Giulio Piovaccari and Gilles Guillaume