Stellantis writes off $26 billion in 'reboot' of electric car business. The stock collapsed

European carmaker Stellantis said a reorganization of its business has led to a €22.2 billion ($26.5 billion) write-down in the second half of fiscal 2025, and said it will not pay a dividend in 2026. This is a "reset" of the company's business due to reduced development in the electric vehicle segment, the Financial Times points out .

Amid the news, the company's shares plunged 27% at the moment in Paris and Milan to less than €6 per unit, the lowest level since June 2021, when Stellantis was created by the merger of Fiat Chrysler and Peugeot PSA, Reuters points out. The company's papers also dragged down the STOXX Europe 600 Automobiles & Parts sectoral auto index (-3.88% at the time of publication) and shares of other European automakers: Valeo and Forvia were losing about 1% and 1.7% respectively in Paris trading, while Renault's papers fell almost 3.5%.

Stellantis' write-downs will be factored into the company's results for the second half of fiscal 2025, the company said. They were largely all related to adjustments to product plans in line with customer preferences and new U.S. emissions regulations. "This largely reflects significantly lower expectations for electric vehicles," Stellantis noted. The write-downs include "cash payments of approximately €6.5 billion, which are expected to be spread over four years beginning in 2026," the release also said.

"While the asset write-downs were fully expected, their scale and the large portion of the €6.5 billion payout, albeit spread over four years and directed to suppliers, is a key negative factor," Citi said in a research note, Reuters points out.

Along with duties, slowing demand in its largest market - China - and competition from Chinese manufacturers, Western automakers have to contend with slower-than-expected market adoption of electric cars, Reuters writes.

Stellantis' announcement of the write-downs follows similar, albeit smaller, announcements from the company's rivals Ford and GM, which also recently announced write-downs of $19.5 billion and $7.1 billion , respectively, due to a decline in electric vehicle production, CNBC recalls.Many Western automakers are abandoning battery electric car models in response to low demand and the policies of U.S. President Donald Trump's administration, which last year eliminated tax incentives for buying electric vehicles, Reuters notes.

AJ Bell investment director Russ Mould, commenting on statements made by Stellantis executives in a Friday note, said the European automaker has made a "bad bet" on electric vehicles: "A long-standing argument for why many drivers are not yet making the switch to electric vehicles has to do with concerns about price, availability of charging infrastructure and how long the battery will last during a trip," he noted, adding, however, that the relative success of some automakers like BYD suggests that "many are still willing to take a risk" and start using electric cars. "This begs the question of whether Stellantis' dissatisfaction with sales of its electric cars is due to market issues or whether drivers simply don't like their cars," Mould concluded (quoted by CNBC).

According to MarketWatch, of the 31 analysts who monitor Stellantis receipts in New York, the majority of experts - 16 - advise "hold" them in their portfolios, 11 recommend buying (Buy and Overweight ratings), and four advise selling (Underweight and Sell).

This article was AI-translated and verified by a human editor