Whalesbook
Stellantis Faces Massive EV Write-Downs as Profitability Delays Loom; Dividend Suspended
Stellantis has reported a staggering €20.1 billion net loss for the second half of 2025, a figure deeply impacted by €22.2 billion in charges and writedowns related to a substantial strategic pivot away from aggressive electric vehicle (EV) expansion. The automotive giant, parent to brands like Jeep and Peugeot, posted negative adjusted operating income (AOI) of €1.38 billion for the period, underscoring the financial strain of re-evaluating its long-term electrification plans. Despite these headwinds, net revenues for the July-December period saw a 10% year-over-year increase, signaling underlying demand resilience for its current offerings.
The EV Pivot's Steep Price Tag
Chief Executive Officer Antonio Filosa acknowledged that the financial results "reflect the cost of over-estimating the pace of the energy transition." The €25.4 billion in full-year writedowns also encompass provisions for vehicle quality issues, which Filosa partly attributed to cost-cutting measures implemented under former CEO Carlos Tavares. These charges include approximately €6.5 billion in expected cash payments spread across four years starting in 2026. This significant impairment highlights a broader industry trend where automakers have misjudged the pace of consumer adoption and the economic viability of rapid EV scaling. Stellantis' peers, including Ford with $19.5 billion in EV strategy adjustments and General Motors with over $7 billion in EV-related charges, are undertaking similar re-alignments.
A Long Road to Positive Cash Flow
The company's financial health indicators reflect the ongoing challenges. As of February 2026, Stellantis' Price-to-Earnings (P/E) ratio stands at a negative -6.64, indicative of its current net losses. The market capitalization hovers around €21.35 billion. While Stellantis reiterated its 2026 guidance for mid-single-digit net revenue growth and a low-single-digit adjusted operating margin, the stark reality is that industrial free cash flows are not projected to turn positive until 2027. This extended timeline, coupled with the suspension of the 2026 dividend, signals a period of cautious financial management and a necessary prioritization of balance sheet strength over shareholder payouts. The company's industrial available liquidity stood at €46 billion at the end of 2025, providing a buffer during this transition.
The Bear Case: Structural Weaknesses and Competitive Gaps
Stellantis' strategic reset exposes deeper structural concerns. The company's dependence on internal combustion engine (ICE) vehicles and hybrids, while potentially profitable in the short term, risks future regulatory penalties and competitive disadvantage against EV-focused rivals and increasingly aggressive Chinese manufacturers. Reports suggest Chinese EVs are entering markets at prices 30-40% below Western competitors, intensifying price pressures. Furthermore, past allegations of cost-cutting under Carlos Tavares leading to vehicle quality problems, as noted by dealers and insiders, could resurface as a concern for the new leadership under Antonio Filosa. Filosa, a 25-year company veteran, steps into the CEO role with a mandate to navigate these complexities, having previously led operations in South America and North America and steered the Jeep brand. However, the company's stock has been trading near its 52-week low of $7.03 as of February 2026, reflecting investor caution. Analyst sentiment remains mixed, with firms like Goldman Sachs maintaining a 'Hold' rating and lowering price targets, emphasizing scrutiny on the sustainability of its North American turnaround and its pivot away from aggressive electrification.
Future Outlook: Pragmatism Over Ambition
Looking ahead, Stellantis is betting on a multi-powertrain strategy, emphasizing customer choice across EV, hybrid, and ICE technologies. The company plans a new wave of product launches targeting profitable growth opportunities. While 2026 is expected to see sequential improvements in revenue and AOI margin, the critical milestone of positive industrial free cash flow remains two years away in 2027. The market will closely monitor Filosa's ability to execute this pragmatic approach, balancing legacy strengths with the evolving demands of the global automotive industry.