Why there’s very little fallout from Tavares’s Stellantis exit

In a recent rundown of European automotive shares, Swiss bank UBS judged only one car maker’s stock worth buying: Stellantis.

Its 2025 outlook was published two days after the announcement that Stellantis CEO Carlos Tavares had been ousted – an event that might be seen to have a negative impact on the company.

Tavares was instrumental in stitching together Stellantis from the merger of PSA and FCA in 2021. It was his relentless focus on costs and productivity that produced two stellar years with profit margins in the double figures – almost unheard of for a volume car maker. So why has there been no fallout from his exit? 

Stellantis’s shares did fall dramatically immediately following the announcement, but they’ve now returned to above their previous level, despite there being no information yet on Tavares’s successor.

His exit was precipitated by the company’s admission in October that it would shift 200,000 fewer Jeep, Ram and Chrysler vehicles in its key US market this year, slashing its predicted profit margin for the full year to between 5.5% and 7%, down from 13% last year.

Tavares blamed a poor marketing strategy from his US team, but ultimately it exposed tensions between him and the board. They fell out “over what the priorities should be and how to run the business in the remaining time of his tenure”, Stellantis CFO Doug Ostermann said during the Goldman Sachs autos conference on 4 December. 

They also clashed over Stellantis’s famously fractious relationship with unions, dealers, suppliers and governments, none of whom will be mourning Tavares’ departure.

“Clearly we need to build back trust,” Ostermann said – but he also said there weren’t “any real disagreements in terms of long-term strategy”.

The groundwork that Tavares laid down was lauded by UBS in its decision to choose Stellantis as its sole ‘buy’ rating among European car makers.

“Stellantis is potentially the highest return stock in our European autos coverage, despite execution risks,” UBS analyst Patrick Hummel wrote in the note.

Three positives stood out for the bank. 

The first positive was that Stellantis had mostly solved the excessive amount of unsold cars on its US forecourts by cutting ambitious prices and reducing production.

“We came into the year with pricing on many of our vehicles that was $2000 to $3000 above our main competitors,” Ostermann said.

The company is also filling gaping holes in its range, including next year finally launching a new Jeep Cherokee after axing the old one in 2023.

The second positive was that “Stellantis is still the [manufacturer] with the highest degree of EV mix flexibility”.

Key to Tavares’s strategy to merge 14 brands into one company was to reduce the number of vehicle platforms from 20 to four. 

That is now well under way, with all four new platforms enabling flexible production between EVs and hybrids.

“In the shifting sands that we see on this EV adoption rate, this is turning out to be actually quite a good strategy,” Ostermann said.

Stellantis will comfortably hit UK zero-emission vehicle (ZEV) mandate targets this year, according to analysis by NewAutomotive, and Ostermann said it’s already confident of complying with tough CO2 targets starting in the EU next year.

He cited strong orders for the Citroën ë-C3, the first EV from the delayed low-cost Smart Car platform as well as the launch of the related Fiat Grande Panda – “a huge car for us”.

The new small models fill Stellantis gaps in the “B and C segments, which we effectively have very few products in today”, Ostermann said. 

The delays to the Smart Car platform in particular have accentuated those gaps, reducing market share, cutting dealer opportunities and hollowing out factories as older models are phased out. 

“To get the first ‘top hat’ off of new platform right is extremely important, Ostermann said. “But, of course, the downside is when you delay the first vehicle, you delay all the sister vehicles.”

When the Smart Car models – including the new Vauxhall Frontera – finally starting to arrive in the first quarter of next year, Stellantis will have stolen a march on rivals when it comes to low-cost EVs.

The third positive that UBS saw in recommending Stellantis stock was the company’s lack of  exposure to market changes in China – in contrast to key rival the Volkswagen Group.

In a week in which General Motors announced a $5 billion write-down on its business there amid falling demand for global volume brands, Stellantis’s earlier decisions to have almost completely pulled its global brands from China is a bonus to investors.

There are still risks, though.

“After the early departure of CEO Carlos Tavares, investor uncertainty is high,” Hummel at UBS said.

Having no CEO in place potentially for as long as six months is an unusual situation.

The company’s US business is also exposed to potential tariffs on its Mexican-built vehicles under the incoming Donald Trump presidency. 

Stellantis now has to repair relationships with a whole host of stakeholders in way that doesn’t blast holes in its “fortress balance sheet”, as well as working out whether to continue to extend support across its sprawling brand line-up.

But Stellantis has got on top of the EV issue in Europe in a way that few competitors have. It even has a stake in a Chinese brand – Leapmotor – to counter the threat from that direction.

With China a positive for the company, rather than a negative, as it is for so many other European car makers, including the premium brands, Stellantis is looking in a strong position even with the exit of its key architect. 

“I think in hindsight, some of [Tavares’s strategies] are turning out to be even stronger than we thought going in,” Ostermann said.