Stellantis, the automotive conglomerate encompassing brands like Peugeot, Fiat, Jeep, and Citroën, announced a staggering €22 billion charge on , as it recalibrates its electric vehicle strategy. The move, coupled with plans to sell a stake in its battery joint venture, signals a significant setback for the company’s EV ambitions and reflects a broader industry reassessment of the pace of the energy transition.
The €22 billion hit comprises approximately €6.5 billion in cash payments to be disbursed over the next four years, and a substantial €15 billion related to “realigning product plans with customer preferences and new emission regulations in the US,” according to a company statement. This realignment includes the cancellation of the previously planned Ram 1500 BEV, an electric truck Stellantis had touted as a boundary-pushing innovation.
The writedown underscores the challenges legacy automakers face in navigating the shift to electric vehicles, a transition proving more complex and costly than initially anticipated. Similar, though smaller, charges have recently been reported by Ford and General Motors, indicating a widespread recalibration within the industry. The timing of Stellantis’s announcement coincides with a softening of regulatory pressure in both the US and Europe, with authorities easing strict emissions targets after years of demanding a faster transition to cleaner vehicles.
Antonio Filosa, Stellantis’s Chief Executive, attributed the charges to a combination of factors. “The charges announced today largely reflect the cost of overestimating the pace of the energy transition that distanced us from many car buyers’ real-world needs, means and desires,” he said. He also pointed to “poor operational execution,” suggesting internal issues contributed to the financial setback. Filosa, who took the helm in following the ousting of Carlos Tavares, has pledged to restore profitability after a 70 percent plunge in net profit to €5.5 billion.
The decision to sell a 49% stake in its Canadian battery joint venture with LG Energy Solution further demonstrates Stellantis’s revised approach. While the company maintains it remains committed to developing electric vehicles, it now emphasizes a more demand-driven pace, stating that the “journey continues at a pace that needs to be governed by demand rather than command.”
The market reacted sharply to the news. Stellantis shares plummeted nearly 23% in early trading in Milan, reaching their lowest level since , before trading was temporarily halted. The decline wiped out €4.5 billion of the company’s market value.
The shift in strategy comes as demand for electric vehicles in the US has slowed following the Trump administration’s withdrawal of a $7,500 consumer tax credit. This contrasts with the situation in Europe, where EV sales have been robust. The changing regulatory landscape and consumer preferences are forcing automakers to reassess their investment plans and product portfolios.
Analysts suggest that Stellantis’s current actions may not be sufficient to fully address the underlying issues. Analysts at Citi noted in a research report that the announcement does not include any factory closures, and therefore may not fully reset the company’s cost base. They anticipate that further capacity reductions may be necessary in North America and Europe to align with reduced market share expectations.
The €22 billion charge is a significant blow to Stellantis, and a clear indication that the transition to electric vehicles is proving to be a more challenging and uncertain process than many in the industry had initially predicted. The company’s decision to scale back its EV ambitions and focus on a more demand-driven approach reflects a growing recognition that the pace of the energy transition will likely be slower and more uneven than previously anticipated. The lack of a dividend payout in will likely disappoint investors.
The situation at Stellantis mirrors a broader trend within the automotive industry, where automakers are grappling with the high costs of developing and producing electric vehicles, coupled with uncertain consumer demand and evolving regulatory requirements. The coming months will be crucial in determining whether Stellantis can successfully navigate these challenges and regain its footing in the rapidly changing automotive landscape.
