Stellantis $26.5 Billion EV Debacle May Prompt Brand Purge

Stellantis $26.5 Billion EV Debacle May Prompt Brand Purge.

“How quickly profits can recover is not clear, we think slowly”

Stellantis investors steadied their nerves Monday after the shares crashed more than 30% on news of its $26.5 billion electric vehicle calamity. This could prompt action to rationalize its huge collection of often overlapping brands. 

Stellantis shares took a dive Friday after Europe’s second-biggest automaker by sales reported it was taking a $26.5 billion hit as it cut its ambitious EV plans. Stellantis said it now expected to report a loss of $22.6  billion for the second half of 2025 as it realigned its EV product line-up to better match demand. Stellantis now expects a low single-digit operating margin for 2026. It will issue €5 billion ($6 billion) in bonds to underpin its balance sheet. 

Volkswagen and its brands like Audi and Skoda led the European market with sales of 3.6 million sedans and SUVs in 2025 and a 26.9% market share. Stellantis was in second place with about 16%.

Stellantis CEO Antonio Filosa said after over-estimating the pace of “energy transition” he would present a new strategic plan for Stellantis on May 21. The meeting had been announced earlier but before the details of the EV problem had been announced.

Stellantis shares slumped from just under €9 to just over €6 Friday after the news was announced. On Monday, the shares recovered just over 1% to close at €6.19 in Europe.

“How quickly profits can recover is not clear, we think slowly. The worst is now behind the group operationally in the U.S., but there are still doubts around the non-U.S. business,” investment bank HSBC Global Investment Research said in a report.

Road to recovery will be slow
“We’d like to think this is a clearing event, but there remain many questions like weak operating leverage and slow product ramps, and the suggestion that these decisions represent the “vast majority”, but not all of the corrective actions. Our view remains that the road to recovery in earnings and cash is slow,” HSBC said. It retains its “hold” recommendation on the shares.

Stellantis has eliminated some planned fully electric models including the RAM 1500 pickup while delaying Alfa Romeo EV projects in Europe. These actions and write-offs mirror decisions at Ford, GM and VW’s Porsche. 

 Stellantis was created in 2019 by the merger of Fiat Chrysler and PSA Group. In 2021, former CEO Carlos Tavares gave the brands 10 years to justify their existence. Tavares was removed in December 2024 and replaced by Filosa. That deadline has certainly been shortened, and Felipe Munoz, an industry expert who runs the industry research platform Car Industry Analysis, says action is required.

 “Most of these brands were already in dire need of fresh products when the merger was done. Five years later, the situation is pretty much the same. What to do?” Munoz said.

 The U.S. brands comprise Chrysler, Jeep, Ram and Dodge. The European mass market brands are Peugeot, Citroen, Fiat, Opel, and Vauxhall. Lancia, DS, Abarth and Alfa Romeo are wannabe premium brands with Maserati, the lone luxury performer. Stellantis has bought a 21% stake in EV maker Leapmotor of China.

Concentrate on what it does better
“Under Tavares, Stellantis was expected to get rid of some brands. Under Filosa, this is mandatory. The group must concentrate its declining profits on what it does better – light trucks for the Americas, big SUVs for North America, small cars and SUVs for Europe and South America, and vans,” Munoz said in a report. 

“There has not been enough differentiation among some of the brands. It is hard to tell the difference between the positioning of Citroen and Fiat, Opel and Peugeot in Europe. What’s the difference between a DS and the upcoming Lancia cars? The premium hub has not worked either. Maserati as a luxury brand, and Alfa Romeo as a premium one, have not been able to find a decent position within their respective segments. And in the meantime, the company aims to position Lancia as a premium player too. What’s the point of reviving a brand when you have already two other brands struggling to go on?” asked Munoz.

Despite the bad news, investment researcher Jefferies retained its confidence in Stellantis and retained its “Buy” rating. 

Jefferies said it was surprised by how big the write-off was because Stellantis had bigger ambitions for EV sales and profits than it had anticipated. Jefferies said however unpleasant the scale of the write-off, it doesn’t change the investment case, but adds pressure on management to deliver ”execution and clarity”. 

“Kitchen-sinking” worse than expected
“We continue to view Stellantis as a rare “classic” cyclical opportunity,” Jefferies said. 

Investment bank UBS also retained its “Buy” rating.

“Kitchen-sinking was worse than expected, but capitulation isn’t justified,” UBS said in a report.

“We reiterate our “Buy” rating based on our view that North America, the most important region, has entered a visible recovery path, with strong product momentum driving mix and market share over the next two years,” UBS said.

Munoz reminded investors that significant action from Stellantis is required.

Integrate them, sell them, or simply kill them
“Stellantis needs to address the situation of brands like Lancia, Chrysler, DS, Maserati, Abarth, and Dodge. Whether they integrate them, sell them, or simply kill them. The rest of the brands also need a reboot. Fiat can’t keep competing against Citroen and needs more products following its positive situation in Brazil; Peugeot and Opel must be more differentiated; Jeep needs to accelerate its product plan and better make use of its privileged position as a SUV brand; Ram needs more pickups; and Alfa Romeo needs consistency on its product plan,” Munoz said.

In June last year, Filosa talked about the Stellantis long-term strategic plan without adding any details. The plan adopted in 2022 aimed to double sales by the end of the decade and maintain double-digit operating margins. Some aspects of the plan have been overtaken by events, such as the aim for 100% of sales in Europe to be electric by 2030, and 50% in the U.S.. The meeting on May 21 will fill in the gaps.