Stellantis NV (STLA.US) will undertake a comprehensive overhaul of its operations, recording an impairment charge of approximately €22 billion (around $26 billion). This decision is driven by high costs and weak sales in the electric vehicle market. The charge includes roughly €6.5 billion in cash outlays. Similar actions have previously been taken by Ford Motor (F.US), General Motors (GM.US), and other automakers. The company stated on Friday that this move is part of a new strategy scheduled for release in May. The charges will be recognized in the second half of 2025 and treated as off-balance-sheet items.
This substantial financial adjustment stems primarily from management's acknowledgment that it had been overly optimistic in estimating the pace of the global transition to electric vehicles. This led to a significant misalignment between the company's strategy and actual market demand, consumer purchasing power, and the current state of infrastructure. Stellantis CEO Antonio Filosa admitted that the company must use this financial "drastic measure for survival" to correct its previous aggressive expansion in electrification. This is necessary to address issues such as inventory buildup and profit erosion caused by the current slowdown in demand for pure electric vehicles.
Regarding financial performance, this reset plan will have a profound impact on the group's results. Stellantis expects to report a net loss of between €19 billion and €21 billion in the second half of 2025 due to this impairment. Consequently, the company has decided to suspend shareholder dividends for the 2026 fiscal year. Although a significant portion of the total €22.2 billion charge consists of non-cash impairments, it will still result in approximately €6.5 billion in cash expenditures over the next four years.
Furthermore, to alleviate financial pressure and streamline its supply chain, the group has decided to fully transfer its 49% stake in the Canadian NextStar Energy battery joint venture to its partner, LG Energy Solution. It will also rationally scale back its global battery production capacity plans, involving an amount of about €2.1 billion. The announcement also includes the termination of the joint venture with South Korean battery maker LG Energy Solution in Canada. In 2022, the automaker had announced plans to invest over C$5 billion (approximately $3.7 billion) with LG Energy Solution to build Canada's first large-scale electric vehicle battery manufacturing plant in Windsor, Ontario.
On a strategic level, Stellantis is accelerating its shift from a "fully electric" vision back towards a "multi-energy balance" strategy. The company explicitly stated that it will no longer blindly pursue singular electrification targets, but will instead prioritize profitability and consumer choice. This means that some pure electric projects with thin profit margins or an inability to achieve economies of scale have been canceled or indefinitely postponed. In their place, the group will increase investment in internal combustion engine technology and hybrid products, even including the reintroduction of traditional high-power engines in key models.
Since taking over as CEO last June, Antonio Filosa has been conducting a thorough reform of this 14-brand automaker to regain market share, while scaling back its electric vehicle strategy and reducing costs associated with US tariffs. Stellantis has already halted sales of pure electric models, including the RAM 1500 pickup truck, in the US and has delayed Alfa Romeo's electric vehicle projects in Europe.
Stellantis is not alone in accounting for costs related to weaker-than-expected electric vehicle demand. Ford stated last December that it would record a $19.5 billion charge for restructuring its EV business; rival General Motors has seen its impairment charges swell to $7.6 billion; and Porsche AG lowered its performance expectations four times last year as it adjusted its electric vehicle strategy direction.
Separately, the company also disclosed its operating performance for the second half of 2025. Both net revenue and industrial free cash flow showed improvement compared to the first half, with overall performance meeting market expectations. However, actual results still exhibited some volatility due to one-time factors, such as adjustments to warranty contract estimates, and other special items. Specifically, the operating margin for the second half was in the low single-digit range (1%-3%), below the previous guidance.