Stellantis Stocks Drop Amid $26.5 Billion EV Writedown

Stellantis, the multinational automotive manufacturer, has recently announced a significant writedown of €22.2 billion (approximately $26.5 billion). This moves the company to recalibrate its electric vehicle (EV) ambitions as it faces challenges in the evolving automotive market. This decision has led to a dramatic plunge in its stock prices, with shares dropping up to 25%. This decline marks the lowest point for Stellantis since its formation in 2021 through the merger of Fiat Chrysler and PSA Group.

Impact of EV Writedown on Stellantis

The substantial charges indicate a misalignment between Stellantis’s production strategy and the actual needs and preferences of consumers. According to CEO Antonio Filosa, these writedowns reflect an overestimation of the pace of the energy transition among car buyers. The company is now engaging in a reassessment process that aims to realign its offerings with market demand.

Broader Industry Context

Stellantis is not alone in facing challenges; several major automakers, including Ford and General Motors, have also reported significant writedowns amid a global slowdown in EV demand. Factors contributing to this trend include:

• Reduction in subsidies in the U.S. automotive market.
• Heightened competition from Chinese manufacturers.
• Decreased consumer interest in battery-powered vehicles.

Financial Outlook and Future Moves

As a consequence of the writedowns, Stellantis anticipates a preliminary net loss ranging from €19 billion to €21 billion for the second half of fiscal 2025. The company will not issue dividends this year and expects a cash burn between €1.4 billion and €1.6 billion.

Furthermore, Stellantis plans to issue up to €5 billion in non-convertible subordinated perpetual hybrid bonds to maintain a strong balance sheet, which is projected to have around €46 billion in liquidity by the end of the year. The automotive group aims for a mid-single-digit increase in net revenue and a low-single-digit operating income margin for 2026, with expectations for positive cash flows in 2027.

Strategic Next Steps

In light of its miscalculations, Stellantis is revisiting its approach to EV production. The group is also cutting ties with its 49% stake in a Canadian battery joint venture, selling it to LG Energy Solution for $100 as part of its strategic overhaul.

The company is poised to reevaluate its electric vehicle strategies while addressing customer feedback and adapting to new emission regulations in the U.S. Industry analysts stress that Stellantis must effectively navigate this shift to ensure its long-term viability in the competitive automobile sector.

The final results for Stellantis’s second half of fiscal 2025 will be disclosed on February 26.