Stellantis' China retreat exposes cracks in its EV strategy

by GE Cheng

Three years ago, then chief executive Carlos Tavares laid out an aggressive electrification strategy at Stellantis NV. Today, the Franco-Italian carmaker is absorbing a €22.2 billion hit as it scales back that push.

The group has unveiled a restructuring of its electric vehicle operations and warned it could post a net loss of €19 billion to €21 billion in the second half of 2025. Shares fell more than 25% in Milan and about 24% in US trading, erasing tens of billions of euros in market value.

Stellantis wrote down €14.7 billion linked to battery-electric vehicle projections, cut €2.1 billion in battery capacity and set aside €5.4 billion for quality and restructuring costs. Investments once framed as strategic bets have now been pared back.

The charges reflect "the impact of previous poor operational execution", new chief executive Antonio Filosa said, acknowledging the company had outpaced market demand.

Formed in 2021 through the merger of PSA Group and Fiat Chrysler Automobiles, Stellantis became the world's fourth-largest carmaker by sales, combining 14 brands including Jeep, Peugeot, Citroën, Maserati, Ram and Alfa Romeo.

Revenue reached US$204.9 billion in 2023 but fell 17% in 2024 to about US$165 billion.

In the first half of 2025, global deliveries declined 8% year on year to 2.69 million units. The group reported a €2.3 billion net loss as revenue dropped 13%. Shipments fell 23% in North America and 7% in Europe.

Those regions remain its profit base. Yet analysts argue the deeper vulnerability lies in China.

Losing China

Stellantis' weakness in China predates the EV slowdown. ZENG Zhiling, general manager of GlobalData's Shanghai office, said product cycles under Peugeot, Citroën and Fiat lagged local rivals for years.

"Localization efforts were slow, and product launches failed to keep pace with local competitors," Zeng told Jiemian News. He said China was largely treated as an extension of Europe, leaving the joint ventures out of step with local demand.

PSA's premium DS brand struggled to gain traction even before the merger. Dealer networks for Peugeot and Citroën were later scaled back, further reducing visibility.

Maserati, once buoyed by Chinese buyers, has also seen demand evaporate. Sales in China fell from 14,400 units in 2017 to 1,228 in 2024, down 71%. In the first five months of 2025, just 384 vehicles were sold. Dealers cut prices on the electric Grecale from 898,800 yuan to 358,800 yuan, yet volumes remained subdued.

Jeep's exit marked a turning point. Its joint venture with GAC Group sold 222,300 vehicles in 2017. After quality controversies and a steady sales decline, the partnership was dissolved in 2022 and declared bankrupt in 2025.

In the first half of 2025, Stellantis sold fewer than 29,000 vehicles in China, leaving it with market share below 0.2%.

China has been the world's largest new energy vehicle market for 17 consecutive years and accounts for more than 60% of global EV sales. It has also become the sector's primary proving ground for battery and automotive software innovation.

The EV miscalculation

Under Tavares, Stellantis pledged that by 2030 all passenger car sales in Europe would be battery-electric and that EVs would account for half of US sales. The group committed billions to dedicated platforms and battery capacity.

Demand, however, cooled as European subsidies were reduced and US consumers hesitated over pricing and charging infrastructure.

Stellantis scrapped plans for the electric Ram 1500 pickup and sold its 49% stake in Canadian battery venture NextStar Energy, a joint project with LG Energy Solution, for US$100, despite more than C$5 billion already invested.

Analysts say the more consequential misjudgment was underestimating China's strategic weight.

While BYD Co. Ltd. delivered 4.27 million vehicles globally in 2024, up 41%, and expanded overseas sales by nearly 72%, Stellantis has struggled to match that pace. In 2025, BYD's overseas deliveries exceeded 1.05 million units, up 145%.

Chinese EV makers such as XPeng Inc., NIO Inc. and Li Auto Inc. operate development cycles of less than two years and push frequent software upgrades. Traditional automakers typically require three to four years to refresh a model.

A reset without clarity

To stabilize its balance sheet, Stellantis suspended its 2026 dividend and plans to raise up to €5 billion through hybrid bonds.

It is also shifting resources back to North America, pledging US$13 billion in new investment and leaning on higher-margin combustion models under brands such as Ram and Jeep to generate cash flow.

At the same time, the company has turned to partnerships in China. In October 2023, Stellantis invested about €1.5 billion in Leapmotor Co. Ltd., later forming Leapmotor International, in which it holds 51%, to sell Leapmotor vehicles outside Greater China.

Some analysts view the move as pragmatic. Others question whether outsourcing technology can compensate for weaker in-house capabilities.

Since peaking in March 2024, Stellantis has shed nearly €70 billion in market value.

Analysts at RBC Capital Markets said the restructuring could amount to a "one-off clean-up" but cautioned that investors need clearer signs of operational recovery. Evercore ISI described the group's 2026 outlook as "vague".

Stellantis' predicament mirrors a broader industry shift. As electrification and software reshape competition, scale alone offers diminishing protection. For global carmakers, losing China increasingly means losing access to the fastest-moving center of automotive innovation.