Stellantis Shocking Cost Announcement: Stock Prices Dropped

Unexpected Cost Announcement from Stellantis

The automotive giant Stellantis surprised investors by announcing that its costs are about 6.5 billion euros in cash payments. The company stated that this decision is a significant part of its new strategy to be announced in May.

Expenses Excluded from Profit Items

Stellantis plans to incur these expenses by the second half of 2025. Following the announcement that expenses exceeded analysts' expectations, Stellantis shares experienced a 14% decline in Milan. Additionally, the company’s stock has lost more than 40% of its value throughout the past year.

Partnership Terminated

This announcement also includes the termination of the joint venture with South Korean LG Energy Solution. Stellantis had previously announced plans to invest 5 billion Canadian dollars to establish a large-scale electric vehicle battery manufacturing facility in Windsor, Ontario with LG Energy in 2022.

Strategic Steps from the CEO

CEO Antonio Filosa is restructuring the 14-brand automotive manufacturer to regain market share, while stepping back from electric vehicle targets and trying to mitigate costs related to U.S. tariffs.

Loss Predictions and Financial Plans

Stellantis forecasts a net loss of around 21 billion euros for the second half of 2025. For this year, it expects a low single-digit operating margin, including around 1.6 billion euros in tariff expenses. The company plans to issue bonds of up to 5 billion euros to strengthen its balance sheet.

Stellantis will announce its full-year financial results on February 26. In May, it will share detailed information about its strategic plans with investors.

Some competitor firms are also facing similar challenges. Ford announced it will incur 19.5 billion dollars in costs to restructure its electric vehicle business, while General Motors reported a 7.6 billion dollar loss. Porsche AG has had to retract its electric vehicle expectations four times.