Stellantis NV is undertaking a massive strategic reset, absorbing a €22 billion ($26 billion) charge as it recalibrates its electric vehicle (EV) strategy. The move, announced Friday, , sent the automaker’s shares plummeting across European and U.S. Markets, marking a significant reversal for the company and signaling broader challenges within the automotive industry’s transition to electric power.
The substantial charge reflects, according to Stellantis CEO Antonio Filosa, an overestimation of the speed at which consumers would adopt electric vehicles. “The charges announced today largely reflect the cost of over-estimating the pace of the energy transition that distanced us from many car buyers’ real-world needs, means and desires,” Filosa stated. This admission underscores a growing recognition among automakers that the path to full electrification is proving more complex and protracted than initially anticipated.
The financial hit is larger than those recently taken by Ford ($19.5 billion) and General Motors ($7.9 billion) in similar strategic shifts. Stellantis’s stock experienced a particularly sharp decline, falling 27% in European trading on Friday, with Italian shares down nearly 25% and New York-listed shares dropping 23%. The company’s shares are currently down more than 13% since the beginning of .
The reset involves a pullback from aggressive EV targets and a renewed focus on internal combustion engine (ICE) vehicles, including the reintroduction of the “Hemi” engine. This decision is particularly notable in North America, where Stellantis has largely abandoned plug-in vehicle production. The company is effectively reversing course on investments made in anticipation of faster EV demand.
Adding to the financial strain, Stellantis recently sold its stake in the NextStar battery joint venture in Canada to LG. This divestiture, coupled with the $26 billion charge, paints a picture of a company scrambling to adjust to changing market realities and mitigate losses.
The situation highlights a broader trend within the automotive industry. While EV sales are growing, they have not reached the levels projected by many automakers. Consumer hesitancy, driven by factors such as price, range anxiety, and charging infrastructure limitations, is contributing to slower-than-expected adoption rates. The end of federal EV subsidies has also played a role, particularly in the U.S. Market.
The financial implications extend beyond Stellantis itself. U.S. Taxpayers have provided billions in subsidies to Detroit-based automakers to build EV manufacturing capacity, much of which will now be repurposed for ICE vehicle production. While the U.S. Government is not currently seeking to reclaim these funds, some in Canada are attempting to recover subsidies related to shuttered plants.
DZ Bank recently lowered its fair value estimate for Stellantis to €8 per share, while maintaining a ‘buy’ rating. This suggests that despite the current challenges, the bank still sees long-term value in the company, albeit at a lower price point.
The company’s previous CEO, Carlos Tavares, had set ambitious goals for EV sales, aiming for 100% of European sales and 50% of U.S. Sales to be electric by 2030. Tavares was replaced in 2024 following a decline in U.S. Sales, where Stellantis is heavily reliant on high-margin Jeep and Ram pickups. The current CEO, Antonio Filosa, who took the helm last summer, emphasized the need to prioritize customer preferences and adjust the company’s strategy accordingly.
“What we are announcing today is an important strategic reset of our business model… to put our customer preferences back at the center of what we do, globally and in each region,” Filosa explained. This signals a shift towards a more pragmatic approach, focusing on meeting current consumer demand rather than aggressively pushing for a rapid transition to EVs.
The scale of Stellantis’s write-down is significant. The $26 billion charge exceeds the company’s current market capitalization of €17.9 billion ($21.3 billion USD). This raises concerns about the company’s financial stability and its ability to navigate the evolving automotive landscape. The company is also anticipating further losses in 2025.
The situation at Stellantis serves as a cautionary tale for other automakers pursuing ambitious EV strategies. It underscores the importance of accurately assessing consumer demand, managing investment risks, and adapting to changing market conditions. The company’s retreat from EVs could have broader implications for the automotive industry, potentially slowing down the pace of electrification and prompting a reassessment of investment priorities.
