Why has Stellantis's CEO Stepped Down From the Company?

Stellantis, the fourth largest automotive manufacturer in the world has just announced the resignation of its current CEO, Carlos Tavares.

The company was searching for a successor amid staff protests and slumping sales.

But Carlos left the position last Sunday with immediate effect, making his departure far earlier than expected.

Until a new CEO is appointed next year, board Chairman John Elkann will lead an interim executive committee as CEO.

A statement released by Stellantis cites "different views" between the CEO and the company's board and shareholders as the reason behind the decision.

However the factors arguably run far deeper, highlighting the need for Stellantis to strategically pivot its manufacturing focus.

“Stellantis’ success since its creation has been rooted in a perfect alignment between the reference shareholders, the Board and the CEO," says Stellantis’ Senior Independent Director, Henri de Castries.

"However, in recent weeks different views have emerged which have resulted in the Board and the CEO coming to today’s decision.”

Struggling to balance sales & product launches

Stellantis is currently experiencing a financial slump.

In the last five quarters the manufacturers sales fluctated in numbers from US$54bn in June 2023 to US$49bn in June 2024.

In the manufacturers last quarter its net revenue and number of vehicles sold worldwide dropped substantially.

The reasons for this are complex, but one driving factor has been Stellantis's struggle to keep up with its own schedule for new product launches. 

Introducing new products has of course been key to Stellantis's shift to electrification.

But when introducing new automotive products there is an inevitable delay or gap in launching, which makes it difficult to attract and retain customers, leading to sales decline.

To tackle this Carlos implemented cost-cutting measures including reducing headcount by 15.5% and relocating to lower-cost countries.

Measures which have led to widespread protest from the United Auto Workers union and dealership network, faced with subsequent layoffs and production cuts. 

All the while Stellantis has been navigating the growing dominance of Chinese automotive manufacturing, which provides more affordable alternatives then Stellantis's offerings.

This has been especially prominent with its EV lines, highlighting a larger challenge for the automotive sector.

The need for a new EV strategy

Its safe to say that Stellantis has pursued an ambitious EV strategy under its "Dare Forward 2030" plan.

With a commitment to achieving carbon neutrality by 2038, Stellantis aims to have 100% of its sales in Europe and 50% in the U.S. come from battery EVs by 2030.

This strategy includes launching more than 75 BEV models globally by the end of the decade, spanning all of Stellantis's 14 iconic brands such as Jeep, Peugeot, Fiat, and Dodge.

The company is also investing over €30 billion ($US31bn) in electrification and software development by 2025.

Battery technology is a key focus, with Stellantis establishing five gigafactories across Europe and North America to support its production targets.

This is of course driven by mounting pressures for automotive manufacturers to meet the ZEV mandate- which mandates a certain percentage of all cars produced and sold must be EVs.

This commitment to EVs bodes well for the future of sustainability. All automotive manufacturers should be pouring innovation and investment into green alternatives.

But it hasn't resulted in ideal financial outcomes, largely due to stagnating EV demand.

Consumer adoption has been slow, largely thanks to the underdeveloped nature of EV infrastructure and lack of tangible incentives to make the shift. 

Manufacturers then face heavy fines from the government when they fail to sell the vehicles they have been mandated to produce.

Stellantis to avoid this recently consolidated its UK operations at its production facility in Ellesmere Port, Cheshire.

Ellsemere Port is the UK's first EV-only manufacturing plant, with this consolidation leading to the closure of Stellantis's historic plant in Luton and the loss of thousands of jobs.

A new CEO, a new era for Stellantis?

With new leadership comes new opportunity: the chance for Stellantis to shift its strategy and improve financial results. 

In the wake of this, its important not to overlook the contributions and achievements of Carlos Tavares, who led the company through a transformative period.

Chairman John Elkann certainly hasn't.

“Our thanks go to Carlos for his years of dedicated service and the role he has played in the creation of Stellantis, in addition to the previous turnarounds of PSA and Opel, setting us on the path to becoming a global leader in our industry," he says.

"I look forward to working with our new Interim Executive Committee, supported by all our Stellantis colleagues, as we complete the process of appointing our new CEO.

"Together we will ensure the continued deployment of the Company’s strategy in the long-term interests of Stellantis and all of its stakeholders.”

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