Adds investor and analysts' comments, details on writedowns and context throughout

By Giulio Piovaccari

MILAN, Feb 6 (Reuters) - Stellantis STLAM.MI announced 22.2 billion euros ($26.5 billion) of charges on Friday as it scales back its electric-vehicle ambitions, hammering its shares as automakers pay the price of misjudging the switch to cleaner driving.

The move follows similar, albeit smaller, writedowns by rivals including Ford F.N and General Motors GM.N as many Western automakers retreat from battery-powered models in response to the Trump administration's policies and soft demand.

The company's Milan-listed shares plunged as much as 25% on Friday, the lowest since Stellantis was created in early 2021 through the merger of Fiat Chrysler and Peugeot maker PSA.

Alongside tariffs, slower demand in top market China, and cheap competition from Chinese manufacturers, legacy automakers are having to grapple with a slower-than-expected take-up of EVs, particularly in the U.S. where President Donald Trump has rolled back subsidies and dismissed green technologies.

"The Company has taken the vast majority of decisions required to correct direction, particularly related to aligning our product plans and portfolio with market demand," Stellantis - which will present its new business plan in May - said in a statement.

GROUP TO MAKE CASH PAYMENTS OVER FOUR YEARS

Fabio Caldato, portfolio manager at AcomeA SGR, which owns Stellantis shares, said that above-consensus charges for Stellantis became more likely after impairment taken by GM and Ford.

"Further encouraging data is needed to restore full investor confidence in Stellantis, also because we are not seeing strong signs of recovery in the automotive semiconductor cycle, which could limit the group's sales recovery potential," he told Reuters.

The charges, which will be booked in results for the second half of 2025, are mainly related to the re-alignment of product plans with customer preferences and new emission regulations in the U.S., "largely reflecting significantly reduced expectations for EV products", the company said.

They will also follow the resizing of Stellantis' EV supply-chain and changes in its estimates for contractual warranty provisions due to insufficient product quality, as well as charges for already announced job cuts in Europe.

The writedowns include cash payments of about 6.5 billion euros expected to be spread over four years starting from 2026, it added.

"Whilst an impairment was very much expected, the magnitude and larger cash out component at 6.5 billion euros, albeit spread over 4 years to suppliers is a key negative," Citi analysts said in a note.

SCALING BACK EV AMBITIONS

CEO Antonio Filosa started downsizing the Fiat to Jeep maker's EV ambitions last year when he took the helm, after previous boss Carlos Tavares' strong bet on electrification resulted in a protracted sales decline in Europe and in the group's former profit powerhouse, the North American market.

As part of this strategy, the Italian-French-American group on Thursday also agreed to sell its 49% stake in a battery joint venture in Canada to South Korean partner LG Energy Solution 373220.KS.

Due to the writedowns, Stellantis now expects a preliminary net loss of between 19 billion and 21 billion euros in the second half of fiscal 2025 and will not pay a dividend this year.

It expects industrial cash burn of between 1.4-1.6 billion euros in the second half.

The group will also issue up to 5 billion euros in non-convertible subordinated perpetual hybrid bonds.

"These actions will contribute to preserving a strong balance sheet, with approximately 46 billion euros in industrial available liquidity at year-end," it said.

For 2026, Stellantis forecast on Friday a mid-single-digit increase in net revenue and a low-single-digit adjusted operating income margin. It expects positive industrial free cash flows in 2027.

The company will release final second half and full-year 2025 results on February 26.

($1 = 0.8477 euros)

(Reporting by Giulio Piovaccari; Editing by Gavin Jones, Mark Potter and Emelia Sithole-Matarise)

((giulio.piovaccari@thomsonreuters.com))