Stellantis Takes a €22 Billion Hit as Electric Vehicle Growth Slows Down
The French-Italian multinational carmaker Stellantis has admitted that it "overestimated" the pace of shift to electric vehicles (EVs) and will take a significant charge of €22 billion. The company, which owns brands like Peugeot, Fiat, Jeep, and Citroën, is planning to sell a stake in its battery joint venture and cancel several electric vehicle projects due to reduced customer demand.
The €6.5 billion cash payment, spread over four years, represents a significant chunk of the charge. Almost €15 billion relates to "realigning product plans with customer preferences and new emission regulations in the US," where demand for EVs has collapsed due to the withdrawal of a $7,500 consumer tax credit and regulatory changes aimed at curbing car emissions.
The company's CEO, Antonio Filosa, stated that the charges largely reflect the cost of overestimating the pace of energy transition, which led to disconnecting from customers' needs. He acknowledged "poor operational execution" as another factor contributing to the charge.
Shares in Stellantis plummeted by 25% on Friday, wiping nearly €6 billion off its market value, and have lost more than half their value over the past year. Analysts predict that Stellantis may need to consider factory closures or reduce production to reset its cost base.
The company's push into the EV market was ambitious, with former CEO Carlos Tavares aiming for 100% of sales in Europe and 50% in the US to be electric by the end of the decade. However, demand has collapsed due to regulatory changes and consumer preferences shifting away from EVs.
Experts argue that Stellantis's frustration over its EV sales may be linked to market issues rather than a problem with the vehicles themselves. The company is set to present an update of its long-term strategy at a capital markets day in May, which will likely shed more light on its plans for electric vehicle growth and how it intends to adjust to changing market conditions.
The French-Italian multinational carmaker Stellantis has admitted that it "overestimated" the pace of shift to electric vehicles (EVs) and will take a significant charge of €22 billion. The company, which owns brands like Peugeot, Fiat, Jeep, and Citroën, is planning to sell a stake in its battery joint venture and cancel several electric vehicle projects due to reduced customer demand.
The €6.5 billion cash payment, spread over four years, represents a significant chunk of the charge. Almost €15 billion relates to "realigning product plans with customer preferences and new emission regulations in the US," where demand for EVs has collapsed due to the withdrawal of a $7,500 consumer tax credit and regulatory changes aimed at curbing car emissions.
The company's CEO, Antonio Filosa, stated that the charges largely reflect the cost of overestimating the pace of energy transition, which led to disconnecting from customers' needs. He acknowledged "poor operational execution" as another factor contributing to the charge.
Shares in Stellantis plummeted by 25% on Friday, wiping nearly €6 billion off its market value, and have lost more than half their value over the past year. Analysts predict that Stellantis may need to consider factory closures or reduce production to reset its cost base.
The company's push into the EV market was ambitious, with former CEO Carlos Tavares aiming for 100% of sales in Europe and 50% in the US to be electric by the end of the decade. However, demand has collapsed due to regulatory changes and consumer preferences shifting away from EVs.
Experts argue that Stellantis's frustration over its EV sales may be linked to market issues rather than a problem with the vehicles themselves. The company is set to present an update of its long-term strategy at a capital markets day in May, which will likely shed more light on its plans for electric vehicle growth and how it intends to adjust to changing market conditions.
! I mean, I'm not surprised though, overestimating EV sales is like predicting the next big meme before it happens 
. Companies gotta stay on top of customer preferences and all that jazz. But €6.5 billion in cash payments? That's like buying me a new gaming PC every year for 4 years 
! Maybe Stellantis should just start selling pizzas instead, they'd be more popular than EVs 
.
... who hasn't overestimated EV demand at some point? It's crazy how quickly the market can shift 
. They're basically saying they need to regroup and adjust to new customer preferences and regulations. Can't say I'd be surprised if production gets scaled back or even factory closures happen 
. The whole thing just feels like a classic case of "we were too early to the party" 
.
. I mean, I knew they were ambitious with their plans for 100% electric sales in Europe and the US by the end of the decade, but I didn't think it would be like this 
. I'm kinda surprised that demand just collapsed due to regulatory changes and consumer preferences shifting away from EVs... like, what did they expect? 
It's not like they're making terrible cars or anything! 
The fact that they're planning to sell a stake in their battery joint venture and cancel projects because of it is so crazy 
. I wonder what their strategy will be going forward... maybe they need to re-evaluate their target market and adjust accordingly 
.
Stellantis's €22 billion hit is a harsh reality check for the automotive industry 
. It's like they disconnected from customers' needs and didn't adjust fast enough 
. Factory closures or reduced production might be on the cards now... that's a tough pill to swallow for an industry already feeling the pinch 
. On the bright side, Stellantis is being proactive by announcing a capital markets day update in May 
, so we might see some changes in their strategy that could help them regain momentum 
.
I mean I love my EV as much as the next person but 25% drop in shares is wild 
. maybe they just got too aggressive with their plans and didn't do enough consumer research? or was it the gov't changes that made evs less appealing? honestly i think both are valid concerns 
. one thing for sure tho, €22 billion is a massive hit 
. might be interesting to see how they adjust their strategy 
... I'm not sure what's worse, the €22 billion hit or the fact that shares plummeted by 25% 
... Either way, it's gonna be interesting to see how they adjust their plans and try to get back on track