Stellantis plunges on $27 billion bill for EV pullback

By Giulio Piovaccari

MILAN, Feb 6 (Reuters) – Stellantis announced 22.2 billion euros ($26.5 billion) of charges on Friday as it scales back its electric-vehicle ambitions, hammering its shares as automakers pay the price of misjudging the switch to cleaner driving.

The move is the biggest in a series of writedowns, including at Ford and General Motors, as many Western automakers pull back from battery-powered models in response to Trump administration policies and weaker-than-expected demand.

Stellantis’ Milan-listed shares slumped as much as 25% to their lowest since the group was created in 2021 through the merger of Fiat Chrysler and Peugeot maker PSA. The drop means the writedown is now larger than the company’s market value.

“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,” CEO Antonio Filosa said in a statement.

“The reset we have announced today is part of the decisive process we started in 2025, to once again make our customers and their preferences our guiding star.”

Alongside tariffs, slower demand in top market China, and cheap competition from Chinese manufacturers, legacy automakers are having to grapple with a slower-than-expected take-up of EVs, particularly in the U.S. where President Donald Trump has rolled back subsidies and dismissed green technologies.

Chinese EV giant BYD posted weak January sales, hitting its shares and local peers, while Japan’s Toyota – which has fared better than most thanks to a contrarian bet on hybrids – named a new CEO on Friday.

STELLANTIS TO MAKE CASH PAYMENTS OVER FOUR YEARS

Fabio Caldato, portfolio manager at AcomeA SGR, which owns Stellantis shares, told Reuters that higher-than-expected charges had become more likely after hefty impairments by GM and Ford in recent months.

“Further encouraging data is needed to restore full investor confidence in Stellantis, also because we are not seeing strong signs of recovery in the automotive semiconductor cycle, which could limit the group’s sales recovery potential,” he said.

The charges, booked in results for the second half of 2025, mainly relate to re-aligning models with customer preferences and new emission rules in the U.S., “reflecting significantly reduced expectations for EV products”, Stellantis said.

They also reflect reductions to the group’s EV supply chain, revised estimates for contractual warranty provisions due to poor product quality, and previously announced job cuts in Europe.

The writedowns include about 6.5 billion euros in cash payments expected to be spread over four years from 2026.

“Whilst an impairment was very much expected, the magnitude and larger cash out component at 6.5 billion euros, albeit spread over 4 years to suppliers is a key negative,” Citi analysts said in a note.

SCALING BACK EV AMBITIONS

Filosa began scaling back the Fiat to Jeep maker’s EV ambitions last year after taking over from Carlos Tavares, whose aggressive push into electrification contributed to a prolonged sales decline in Europe and in the group’s former profit powerhouse, the North American market.

As part of that shift, the Italian-French-American group on Thursday agreed to sell its 49% stake in a battery joint venture in Canada to South Korean partner LG Energy Solution.

Gartner analyst Pedro Pacheco warned that Stellantis and others risked shifting too far away from EVs.

“There is an overreaction in terms of the strategic pivoting,” he said. “They need to go into this and do things right because their survival might depend on this.”

Due to the writedowns, Stellantis now expects a preliminary net loss of between 19 billion and 21 billion euros in the second half of fiscal 2025 and won’t pay a dividend this year.

It expects industrial cash burn of between 1.4-1.6 billion euros in the second half.

The group will also issue up to 5 billion euros in non-convertible subordinated perpetual hybrid bonds.

“These actions will contribute to preserving a strong balance sheet, with approximately 46 billion euros in industrial available liquidity at year-end,” it said.

For 2026, Stellantis forecast a mid-single-digit increase in net revenue and a low-single-digit adjusted operating income margin. It expects positive industrial free cash flows in 2027.

The company will release final second-half and full-year 2025 results on February 26.

($1 = 0.8477 euros)

(Reporting by Giulio Piovaccari; Editing by Emelia Sithole-Matarise and Mark Potter)