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Stellantis Shares Stabilize As Investors Ponder Tavares Demise

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Stellantis shares steadied as investors tried to make sense of legendary CEO Carlos Tavares’s sudden demise.

Some critics said Tavares downfall resulted from the company’s problems in the U.S., but others suggested his overall record wasn’t as strong as it once appeared. Tavares’ sudden change in direction after his vigorous opposition to European Union CO2 rules might have soured relations with the board.

Stellantis dived 8% when the news broke. That would have looked spectacular if they hadn’t already fallen more than 50% since March. Stellantis shares ended the week at €12.97 after the initial low of €11.60 and compared with a high of just over €27 in late March.

The Stellantis board said it would appoint a successor by the middle of next year. Chairman John Elkann will take over as interim CEO.

Automotive News in an editorial, described Tavares as one of the most brilliant auto executives of his generation, based on his stewardship of the huge merger between Fiat Chrysler and France’s Groupe PSA starting in 2021.

This grouping of 14 brands from across Europe and the U.S. which often appeared to fight against each other for sales, was initially hailed as a huge success. His methods made impressive profits quickly, as overlapping technologies were ruthlessly dropped and economies of scale exploited.

According to Automotive News, this wasn’t all that it seemed.

“For a while – thanks largely to a global pandemic that interrupted supplies, flooded markets with stimulus funds and supercharged automaker profits – Tavares looked as though he could do no wrong.”

“But when conditions normalized and the smoke from the pandemic cleared, what Tavares had actually created was an unwieldy global portfolio of weak, investment-starved brands, a portfolio of products that are too expensive for their customers and a group of investors and creditors with no patience for anything but record profitability.”

Billions in synergies

“He had promised billions in synergies to feed investor returns, but instead created a company held hostage by parochial and nationalistic concerns, with torched supplier relations and even less remaining goodwill from its dealers,” Automotive News said.

Stellantis brands in the U.S. include Dodge, Ram, Jeep and Chrysler. In Europe there are Peugeot, Citroen, Fiat, Alfa Romeo, Lancia, DS, Opel, Vauxhall and Maserati.

Investment researcher Bernstein, in a report entitled “When the Wheels Come Off – Tales of Automotive Exits”, said auto CEOs are celebrated like Formula 1 drivers when they succeed, but “a single misstep can lead to a spectacular spinout”.

“Over the past decades, the auto industry has seen its fair share of abrupt departures—some due to boardroom politics, others born of scandal, strategy misfires, or simply the relentless pace of change. Buckle up as we take a drive through the most notable exits, where ambition, innovation, and a touch of drama collide,” Bernstein said.

It then listed many spectacular and surprising exits, including Herbert Diess from Volkswagen in 2022, Carlos Ghosn from Renault-Nissan in 2018, and Rick Wagoner from General Motors in 2009.

Tavares “turbocharged” Stellantis into one of the world’s largest automakers.

“His abrupt departure feels like a shockwave across the industry. While his tenure delivered bold moves, his exit reminds us that even the best drivers sometimes face unexpected detours. His departure was attributed to strategic disagreements with the board amid declining sales and increased competition,” according to Bernstein.

Stellantis had said Tavares was leaving early because his views on the company’s future clashed with the board, but didn’t elaborate. Subsequently, media reports asserted the argument was about Tavares refusing to back the industry push to renegotiate the EU CO rules which insist 80% of new sedan and SUV sales are EVs by 2030, and 100% by 2035.

Tavares railed against EU regulators

That was strange because Tavares had been the most adamant industry critic of the rules. He railed against the EU regulators, saying they induced a problem because politicians thought they knew better than engineers which technology would win.

“What is clear is that electrification is a technology chosen by politicians, not by industry,” Tavares said.

Tavares also said because EVs were much more expensive than internal combustion engine vehicles, Europeans on average wages would be priced out of private transportation and this might spur social unrest.

“I can’t imagine a democratic society where there is no freedom of mobility because it’s only for wealthy people and all the others will use public transport,” Tavares said in a speech in 2020.

His latest thoughts show a radical difference, now demanding that the time for insisting on change to EU rules had passed. The industry required certainty, above all. That might not have sat well with the Stellantis board.

Stellantis troubles in U.S. led to a profit warning in September which included a forecast of a cash burn of up to €10 billion ($10.5 billion) in 2024. Stellantis cautioned shareholders that the profit margin in 2024 would be closer to 5.5 to 7.0%, not 10%. German automakers also issued profit warnings at the same time, but not on this scale.

In its editorial, Automotive News said Stellantis might be ungovernable but was certainly in need of a major overhaul.

“Brands will have to be culled and many jobs are likely to be lost,” it said.

After the announcement last week, investment bank UBS pointed out on the positive side Stellantis left its September profit warning unchanged, while the expected CEO replacement process had been brought forward by about six months.

Stellantis turnaround case

In a report during the week headed “Stellantis – Set to regain momentum: 2025 turnaround case”, UBS retained a favorable outlook for Stellantis.

“Irrespective of this (succession) uncertainty, we still consider Stellantis as the (manufacturer) with the highest degree of EV mix flexibility, barely any dedicated BEV investments and a strong product cadence,” UBS said.

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