Fiat and Jeep owner admits to losing touch with ‘real-world’ needs of drivers

Stellantis has admitted to losing touch with the “real-world” needs of drivers and revealed a €22bn charge tied to its aggressive expansion into electric vehicles, sending shares in the carmaker down by the most on record.

In a dismantling of one of the industry’s most gung-ho EV strategies, the owner of the Peugeot, Fiat and Jeep brands said on Friday that €15bn of the charge related to the cost of scrapping models and revamping the platforms used to make vehicles.

The carmaker, formed in 2021 from the blockbuster merger of France’s PSA and Fiat Chrysler, also warned it would not pay a dividend this year and announced the sale of a stake in a Canadian battery joint venture.

New chief executive Antonio Filosa’s decision to scale back the group’s electric ambitions is a reversal of the strategy pursued by his predecessor Carlos Tavares, who had set a goal that EVs would account for all of its European passenger vehicle sales and 50 per cent of its US ones by 2030.

Filosa said the charges “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”.

Although a writedown from Stellantis had been anticipated, the charge was bigger than expected and the company’s disappointing forecast for its fourth-quarter performance also added to investors’ alarm.

In chaotic trading in Milan on Friday, shares in Stellantis were repeatedly halted as they plunged, closing down 25 per cent.

“Stellantis bulls will say this is a ‘kitchen sink’ moment,” noted RBC Capital Markets analyst Tom Narayan, referring to the €22.2bn charge. But “we await further evidence of a turnaround in business fundamentals”, he added.

The writedown from Stellantis follows similar moves by GM and Ford, taking the total charges stemming from the redrawing of their EV plans to almost $50bn for the trio of carmakers.

Stellantis, which also owns the Ram and Citroën brands, has been one of the manufacturers hardest hit by the slower than expected transition away from petrol-based vehicles, the Trump administration’s scrapping of EV tax incentives and falling market share in key regions.

Billing the charge as a necessary “reset” of the business, Stellantis said it would record it during the second half of the financial year that ended in December.

As a result of the charges, Stellantis forecasts a net loss of up to €21bn for the second half of its financial year, compared with a profit of €100mn a year earlier. It expects revenues of up to €80bn, which would be an increase of 11 per cent from a year earlier.

The group also said it would make cash payments of €6.5bn to suppliers to compensate them for the scaling back of its EV strategy.

Since taking over as CEO last June, Filosa has abandoned plug-in hybrids and reintroduced the popular 5.7-litre “Hemi” V8 engine in the Ram 1500 pick-up truck and other models, including the Jeep Cherokee, that were ditched under Tavares.

Speaking on Friday, Filosa said that the reset would put customers “at the centre of what we do”, adding that “our intent for the future is to grow”.

Filosa’s admission that Stellantis has strayed too far from what customers want and can afford comes amid a broader slowdown in the shift to EVs in the US, with drivers put off by inadequate charging infrastructure and high prices.

Stellantis is seeking to rebuild its US market share that was lost after overpricing its vehicles in the wake of the pandemic. Following the revival of some of the popular models, the company said on Friday that fourth-quarter shipments in North America rose 43 per cent from a year ago to 422,000 units.

Bernstein analyst Stephen Reitman cautioned that the recovery would take time, noting that the group’s US market share fell back to 7.5 per cent in January after hitting 8.1 per cent in the final quarter.

In a sign of the company’s continued struggle in Europe, the group said that shipments in the final quarter of last year fell 4 per cent to 667,000 units.

Stellantis also sold its 49 per cent equity stake in its battery joint venture in Canada with NextStar Energy for €700mn to South Korea’s LG Energy Solution.

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