Stellantis, the parent company of Jeep and Chrysler, has announced a significant “reset” of its business strategy following substantial investments in electric vehicles (EVs) that did not yield the expected returns. On Friday, the company revealed that it will incur charges exceeding $26 billion. This amount primarily encompasses write-offs and cash payouts for canceled EV programs, alongside expenses related to the resizing of its EV supply chain.
The announcement led to a significant drop in Stellantis shares, which plummeted over 28% in morning trading. This strategic overhaul aligns with similar costly restructurings undertaken recently by major automotive competitors, including Ford and General Motors, in response to changing market dynamics.
Many U.S. automakers heavily invested in EV initiatives anticipating stringent environmental regulations from the Biden administration, along with the expectation that more states would follow California’s lead in banning sales of gasoline-powered vehicles within a decade. However, the Trump administration’s rollback of emissions regulations and financial incentives for EV adoption has complicated the landscape, questioning states’ autonomy to implement stricter regulations.
Stellantis CEO Antonio Filosa commented on the charges, stating they primarily stem from an “over-estimation of the pace of the energy transition.” The company conveyed its commitment to providing diverse options for consumers, asserting that the transition to EVs should align with demand rather than regulatory mandates. Stellantis emphasized a dedication to serving customers whose preferences may favor hybrid and advanced internal combustion engine vehicles.
The forecast for EV demand has dimmed significantly, particularly as Stellantis reported that around €14.7 billion of the charges relate to adjusting product plans to align with customer preferences and evolving emission regulations in the U.S. As the company, which trades on the New York, Milan, and Paris stock exchanges, prepares to release its earnings for 2025 on February 26, it has already disclosed a net loss for the previous year and announced it would not issue an annual dividend in 2026.
A recent regulatory shift in Europe adds further uncertainty to the EV transition. The European Union, initially aiming to ban the sale of new internal combustion engine vehicles by 2035, has now indicated that the ban will only apply to 90% of new vehicles, allowing 10% of sales to comprise plug-in hybrids or combustion engine cars post-2035.
The European market has demonstrated lower-than-anticipated demand for EVs, exacerbated by inadequate charging infrastructure across the continent. Moreover, the environmental impact of vehicle production is complex; while gas-powered cars are cleaner to manufacture overall, they generate significantly higher emissions during operation. Conversely, fully electric vehicles, despite being more carbon-intensive to produce owing to extensive battery manufacturing, result in lower lifetime carbon emissions—estimated at 40% less than their gasoline counterparts.
Stellantis’s shift highlights the challenges faced by automakers in navigating the evolving landscape of vehicle manufacturing and environmental compliance, but it also presents an opportunity to reevaluate strategies and align products with consumer demand for the future road ahead.