Stellantis takes massive $26B hit after moving away from EVs

Stellantis on Friday announced it will take a $26.5 billion charge as the automaker cuts back on electric vehicle (EV) production, joining other manufacturers in taking a financial hit after misjudging consumer demand for EVs.

Stellantis – the parent company of brands including Chrysler, Jeep, Dodge and Ram – became the latest automaker to take a charge. The $26.5 billion charge is larger than those taken by Ford and General Motors in the wake of the end of federal EV subsidies.

The automaker had set ambitious EV goals under its former CEO, Carlos Tavares, who aimed for EVs to make up 100% of European sales and 50% of U.S. sales by 2030. Tavares was forced out in 2024 after U.S. sales plunged, where Stellantis is exposed because of its reliance on sales of high-margin Jeep and Ram pickups.

GM TAKES $7B HIT AFTER SHIFTING EV STRATEGY DUE TO SLOWING DEMAND

Across the auto industry, fully electric vehicles represented 19.5% of European sales last year and just 7.7% of new U.S. car sales.

CEO Antonio Filosa, who took the helm at Stellantis last summer, said on a call with reporters that the company's past assumptions about demand for EVs were "over optimistic" and outlined, "What we are announcing today is an important strategic reset of our business model… to put our customer preferences back at the center of what we do, globally and in each region."

FORD CUTS ELECTRIC F-150 LIGHTNING PRODUCTION, TAKES $19.5B CHARGE IN STRATEGIC SHIFT

Stellantis' charges, which were booked in the company's results for the second half of 2025, also reflected quality issues that Filosa blamed on cost cuts that occurred under Tavares, which he said caused the automaker to hire 2,000 engineers globally.

The charges also included reductions to the company's EV supply chain, revised assumptions for warranty provisions due to poor product quality, as well as previously announced job cuts in Europe.

NEW VEHICLE SALES TO DECLINE MODERATELY IN 2026 AS AFFORDABILITY ISSUES WEIGH, FORECAST SAYS

Ross Mould, investment director at AJ Bell, said the writedown showed that Stellantis "got it wrong on how quickly the world would transition from combustion engines to electric power."

Mould added that the success enjoyed by Chinese EV-makers like BYD "begs the question as to whether Stellantis' frustration over its EV sales is linked to market issues or that drivers simply don't like its vehicles."

Stellantis shares sank on the news, with the company's New York-traded stock down more than 22% during Friday's trading session.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

The multinational automaker – which includes American, French and Italian auto brands – saw its Milan-traded shares sink by over 23%.

Stellantis is forecasting a mid-single-digit increase in net revenue for 2026, along with a low-single-digit adjusted operating income margin. It projects positive industrial free cash flows in 2027. The company also won't pay a dividend this year.

Reuters contributed to this report.