Stellantis Group has acknowledged that its products have deviated from the "actual" needs of vehicle owners, while disclosing a €22 billion impairment charge linked to its aggressive electric vehicle (EV) strategy. The announcement triggered the largest single-day share price decline in the company’s history.

The parent company of brands such as Peugeot, Fiat, and Jeep announced on Friday that €15 billion of the €22 billion impairment charge relates to halting the development of several vehicle models and reconfiguring production platforms. This signals a complete departure from one of the industry's most ambitious EV development plans.

Stellantis, formed in 2021 through the merger of France’s PSA Group and Italy’s Fiat Chrysler, also warned that it would suspend dividend payments this year and revealed plans to sell its stake in a Canadian battery joint venture.

The decision by new CEO Antonio Filosa to scale back EV investments marks a reversal of the strategy pursued by his predecessor, Carlos Tavares, who had targeted fully electric passenger vehicle sales in Europe and a 50% EV sales mix in the U.S. by 2030.

Filosa stated that the impairment charge "largely stems from overestimating the pace of the energy transition. This miscalculation has distanced us from the actual needs, purchasing power, and preferences of many customers."

Although market observers had anticipated an impairment charge from Stellantis, the scale of the loss exceeded expectations. Combined with a disappointing fourth-quarter earnings outlook, the announcement intensified investor concerns.

Trading of Stellantis shares on the Milan stock exchange was chaotic on Friday, with the stock plunging 24% and trading halted multiple times.

Commenting on the €22.2 billion impairment, Tom Narayan, an analyst at RBC Capital Markets, noted that "optimistic investors may view this as a 'one-time clearing of problems.'" However, he added, "we still need more evidence of a fundamental improvement in the company’s business performance."

Prior to this, General Motors and Ford Motor have also taken similar impairment measures. Combined, the three automakers have recognized nearly $50 billion in losses related to adjustments in their EV plans.

Stellantis, which also owns brands including Dodge Ram and Citroën, has been among the hardest hit by factors such as the slower-than-expected transition from internal combustion engines to EVs, the cancellation of EV tax incentives under the Trump administration, and declining market share in key regions.

The company described the impairment as a necessary "strategic reset" and stated that the loss will be reflected in its financial results for the second half of the fiscal year ended last December.

As a result of the charge, Stellantis expects to report a net loss of up to €21 billion for the second half of the year, compared to a net profit of €100 million in the same period a year earlier. The group anticipates revenue of up to €80 billion for the half, an 11% year-on-year increase.

Stellantis also announced it will pay €6.5 billion in cash compensation to suppliers to offset losses resulting from the scaled-back EV strategy.

Since becoming CEO last June, Filosa has discontinued plug-in hybrid vehicle programs and reintroduced the popular 5.7-liter "Hemi" V8 engine in models such as the Dodge Ram 1500 pickup and Jeep Cherokee—models that had been phased out under Tavares.

Filosa stated on Friday that the strategic reset will place customers back at the "core of the company’s operations," adding that "the group’s future goal is to achieve business growth."

He admitted that Stellantis’s product development had become significantly disconnected from consumer needs and affordability, noting that the transition to EVs in the U.S. is slowing due to inadequate charging infrastructure and high vehicle prices, which are deterring potential buyers.

Following the pandemic, Stellantis lost U.S. market share due to high vehicle pricing and is now working to regain ground. With the reintroduction of popular models, the company reported a 43% year-on-year increase in North American vehicle shipments for the fourth quarter, reaching 422,000 units.

However, Bernstein analyst Stephen Reitman cautioned that the recovery in market share will take time. He pointed out that after Stellantis’s U.S. market share rebounded to 8.1% in the fourth quarter of last year, it fell back to 7.5% in January.

The company continues to face challenges in Europe, where vehicle shipments declined 4% year-on-year in the fourth quarter to 667,000 units.

Additionally, Stellantis sold its 49% stake in a Canadian battery joint venture with Starwood Energy to South Korea’s LG Energy Solution for €700 million.