Stellantis Takes a $26 Billion Hit on Its EV Retreat — And the Entire Auto Industry Should Be Paying Attention

The bulk of Stellantis's charges — €14.7 billion — relate directly to realigning product plans with actual consumer demand and new U.S. emissions regulations. This represents the company's acknowledgment that its aggressive electric vehicle roadmap, set by ousted former CEO Carlos Tavares in 2022 with a target of 100% EV sales in Europe and 50% in the U.S. by decade's end, was fundamentally disconnected from market reality. An additional €2.1 billion stems from downsizing the company's EV supply chain, including the announced sale of its 49% stake in NextStar Energy, a joint venture with LG Energy Solution that operated a Canadian battery manufacturing facility.

Warranty costs added another €4.1 billion to the tab, while restructuring European operations contributed €1.3 billion. In response to the financial hit, Stellantis suspended its dividend for 2026 and announced plans to raise up to €5 billion through hybrid bond issuances to shore up its balance sheet. The company has also signaled a return to V8 engines for its U.S. models — a striking reversal from the all-electric ambitions of just three years ago.

The financial deterioration is visible across every metric. Revenue plunged from €98.4 billion in H1 2023 to €74.3 billion in H1 2025, a decline of 24.5%. Gross margins collapsed from 21.7% to just 8.4% over the same period. After generating €12.3 billion in free cash flow in 2023, Stellantis burned through €7.1 billion in negative free cash flow in 2024. The company now anticipates a net loss for full-year 2025.

The speed of Stellantis's decline has been breathtaking. When the company was formed through the $52 billion merger of Fiat Chrysler and Groupe PSA in January 2021, it was the world's fourth-largest automaker by volume. Global sales have since fallen 12.3%, from 6.5 million vehicles in 2021 to 5.7 million in 2024. In the critical U.S. market, the collapse has been even more dramatic — a 27% plunge in sales to 1.3 million vehicles, dropping Stellantis from fourth to sixth in domestic rankings and shrinking its market share from 11.6% to 8%. Globally, S&P Global Mobility estimates Stellantis's market share has fallen from 8.1% in 2020 to just 6.1% last year.

The stock tells an equally grim story. At $7.28, Stellantis trades at a fraction of its 52-week high of $14.28, and the market capitalization of $21 billion is less than half of the €22 billion charge it just announced. The company's P/E ratio is meaningless at -8.3x given its losses, and shares trade at a steep discount to their 50-day moving average of $10.70 and 200-day average of $10.09. Since the start of 2026, shares have fallen more than 30%.

RBC Capital Markets analyst Tom Narayan captured the Street's sentiment, calling Stellantis a "show-me-story" and noting that "the company has lost substantial market share given high pricing and a perceived lack of product investment." UBS analysts, while acknowledging the scale of the "kitchen sinking," suggested the stock could be attractive as a potential U.S. "comeback play" under new management's decisive cleanup. But with the company guiding for only a mid-single-digit revenue increase and low-single-digit operating margin improvement in 2026, the path to recovery looks long.

Stellantis's writedown is the largest but hardly the only casualty of the auto industry's electric vehicle miscalculation. Ford has absorbed $19.5 billion in EV-related charges, while General Motors took a $7.1 billion hit in its most recent quarter, posting a Q4 2025 net loss of $2.7 billion and an EPS of -$3.60. Together, the Big Three have now recorded more than $52 billion in combined charges related to their electrification pullbacks.

Yet the market has treated these companies very differently. While Stellantis trades at $7.28 with a negative P/E ratio, Ford has stabilized at $13.80 with a P/E of 11.8x, and GM has actually surged to $84.24 — near its 52-week high of $87.62 — with a P/E of 25.8x. GM's market cap of $78.6 billion dwarfs Stellantis's $21 billion despite both companies posting recent quarterly losses. The divergence reflects Wall Street's confidence in GM's broader turnaround story and skepticism about whether Stellantis can execute under its new leadership.

The parallel retreats from electrification carry a common thread: all three companies are pivoting back toward profitable gas-powered trucks and SUVs — the Ford F-150, the Chevrolet Suburban, the Ram 1500 — while slowing or canceling dedicated EV platforms. Even Tesla, with a market cap of $1.37 trillion, has felt the competitive pressure, recently canceling its two oldest, lowest-selling electric models to repurpose an American plant for humanoid robots. Tesla was surpassed by China's BYD in global EV sales as Elon Musk's focus shifted increasingly toward AI and robotics.

While Western automakers retrench, Chinese automakers are accelerating into the gap with stunning speed. The Chinese automotive sector has become the world's largest vehicle exporter since 2023, and its EV sales have surged by nearly 800% globally, growing from roughly 572,300 units in 2020 to 4.95 million in 2025 inside China alone, according to GlobalData. Outside of China, EV exports have exploded by more than 1,300%, from fewer than 33,000 to more than 474,000 units.

The market share math is stark. Detroit's Big Three — GM, Ford, and Stellantis — have collectively fallen from a combined global market share of 21.4% in 2019 to an estimated 15.7% in 2025, according to S&P Global Mobility. Over the same period, China's BYD and Geely have grown from less than 3% to an estimated 11.1%. Chinese automakers have already captured nearly 10% of European sales as of December 2025, up from virtually zero in 2020, according to Germany-based Dataforce. Their most recent expansion target: Canada, which removed 100% tariffs on Chinese vehicle imports amid a trade dispute with the Trump administration.

Multiple automotive experts have used the word "existential" to describe the threat. "The existential risk to the U.S. auto industry isn't Chinese EVs alone, it's the combination of sustained government support, vertically integrated supply chains and speed," said Elizabeth Krear, CEO of the Center for Automotive Research. Terry Woychowski, a former GM executive now at consulting firm Caresoft Global, was equally blunt: "The Chinese auto industry presents an existential threat to the traditional automakers." GlobalData forecasts Chinese EV production will reach roughly 6.5 million units by 2030 and nearly 8.5 million by 2035, with continued expansion into the U.S. market anticipated.

CEO Antonio Filosa, who succeeded the ousted Carlos Tavares in June 2025, has dubbed 2026 the "year of execution" and framed Friday's charges as a necessary reckoning with past mistakes. "The charges announced today largely reflect the cost of over-estimating the pace of the energy transition that distanced us from many car buyers' real-world needs, means and desires," he said. Filosa pointedly called out errors by former leadership more aggressively than at any point since taking the helm, noting the impact of "previous poor operational execution."

The new strategy involves several concrete moves. Stellantis has announced the "largest investment in Stellantis' U.S. history" — $13 billion over four years — including 5,000 new American jobs. The company launched 10 new products, canceled unprofitable models, and restructured its global manufacturing and quality management operations. In the second half of 2025, U.S. market share ticked up to 7.9%, and the company returned to positive volume growth. The automaker says its electrification journey will continue, but at "a pace that needs to be governed by demand rather than command."

But the balance sheet tells a cautionary tale. Cash and equivalents declined from €43.7 billion at end of 2023 to €30.7 billion by mid-2025. Net debt swung from a net cash position of -€14.2 billion in 2023 to positive net debt of €10.1 billion. Total debt climbed to €40.8 billion, while stockholders' equity eroded from €81.7 billion to €73.1 billion. Stellantis also faces a securities fraud investigation from Ademi LLP, adding legal risk to an already precarious situation. A critically important Capital Markets Day is scheduled for May 21, where Filosa will present an updated long-term strategy — a presentation that could determine whether investors see a turnaround or a further unraveling. Full 2025 earnings are due February 26.