Jeep maker Stellantis facing worst-ever stock rout as it takes $26 billion hit over miscalculating EV demand

By Barbara Kollmeyer

Stellantis follows GM and Ford in misjudging demand for an EV pickup truck

Stellantis followed in path of Ford and General Motors with a multibillion-dollar charge over a miscalculation about the adoption of EVs.

Stellantis shares were headed for their worst-ever day of trading after the maker of Jeep and Ram trucks announced a EUR22 billion (equivalent to $26 million) charge for "overestimating" how fast consumers would switch to electric vehicles.

Shares (IT:STLAM) slumped 26% in Milan trading, following a 5.7% drop on Thursday. U.S.-listed shares (STLA) fell 23%. If those losses hold, it will mark the biggest one-day percentage drop for the shares, according to FactSet data.

Stellantis said the charge will impact financial results for the second half of 2025 and is forecasting a net loss of EUR19 to EUR21 billion for that period. Included are cash payments of approximately EUR6.5 billion related to canceled projects and other ongoing battery electric vehicle products, "whose volumes are now expected to be considerably below prior projections."

"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," Stellantis CEO Antonio Filosa said in the warning ahead of full-year results due later this month.

"They also reflect the impact of previous poor operational execution, the effects of which are being progressively addressed by our new team," Filosa said.

The carmaker said it would not pay a dividend for 2026, and the board authorized issuance of up to EUR5 billion in bonds to bolster its "strong" balance sheet. Separately, Stellantis announced it would sell its 49% energy stake in NextStar Energy, a large-scale Canadian lithium-ion battery manufacturer, to founding joint-venture partner LG Energy Solution (KR:373220).

When it comes to write-downs related to EV overoptimism, Stellantis's hit exceeds other EV-related charges announced in recent months - $19.5 billion from Ford (F) and $7.1 billion from General Motors (GM), whose $20.8 billion write-off in 1992 over retiree healthcare benefits has largely been the high-water mark to date for automotive write-offs.

Analysts appeared stunned at aspects of the hit announced by Stellantis. "Our investor conversations suggested that while an impairmentwas very much expected, the magnitude and larger cash out component at EUR6.5 billion, albeit spread over 4 years to suppliers, is a key negative," analysts at Citigroup said in a note.

Company guidance now implies cash burn in 2026, and 2027 remains "highly uncertain given overall industry pricing trends," they said. "Given that this announcement does not include any factory closures we do not think the news yet resets fully the cost base at Stellantis which is likely necessary on the reduced market shares."

The upside would involve capacity reductions to fully reset North American and European businesses, the analysts added.

"We continue to believe [Stellantis] is a show-me-story. In the U.S., the company has lost substantial market share given high pricing and a perceived lack of product investment. [Stellantis] bulls will say this is a 'kitchen sink' moment and could be a cleaning event," Tom Narayan and Thomas Ito, analysts at RBC Capital Markets, said in a note.

The analysts, who rate Stellantis shares at market perform, say the cash charges are manageable over four years given the automaker's EUR46 billion industrial liquidity position at the end of 2025. But Narayan and Ito want to see more evidence of business fundamentals turning around, saying they prefer GM given its "substantially lower magnitude of charges."

-Barbara Kollmeyer

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02-06-26 0952ET