Despite the recent optimistic statements by President John Elkann, who had spoken of 2025 as a “year of stabilization,” Stellantis finds itself facing a perfect storm of economic and geopolitical challenges. The automotive group, already battered by a stock value collapse of more than 50% in the last year, must now confront the threat of trade tariffs imposed by the Trump administration.
Stellantis’ identity crisis under the shadow of tariff wars
Last week, the US president announced 25% tariffs on imports from Canada and Mexico, a move that prompted Stellantis executives, along with those from Ford and General Motors, to urgently request intervention. The situation has become so critical that the group’s executives have even sought support from the United Auto Workers union.
For Stellantis, the issue is particularly delicate: approximately 45% of its sales in the United States come from imported vehicles, exposing the company to significant tariff risk. Although the tariffs’ implementation has been postponed to April 2, Trump further raised tensions by threatening to increase tariffs on Canadian steel and aluminum to 50%, before backing down.
This trade conflict comes at an already fragile moment for the group. The strategy of former CEO Carlos Tavares, based on high prices and aggressive cost-cutting, has led to a drastic 70% drop in net profit over the last year, while competitors like General Motors recorded record profits. Still without a new CEO, Stellantis‘ profitability forecasts appear modest, not considering the potential impact of the new tariffs.
The paradox is that Stellantis was conceived as a global giant robust enough to face the transition to electric mobility. Instead, under Tavares’ leadership, the company has shifted production and jobs to low-cost countries to finance the development of electric vehicles. Now Elkann finds himself having to reverse this course, announcing billion-dollar investments in the United States, including the reopening of the Belvidere plant in Illinois and the hiring of approximately 1,000 people.
The downgrading of Stellantis’ debt by S&P Global Ratings to BBB, just two notches above “junk” level, further signals market concerns. The rating agency warned that price cuts and tariff risks could limit the company’s ability to expand sales and margins in 2025.
To revive the group’s fortunes, Stellantis is focusing on more competitive prices, aggressive marketing, and the launch of new products, such as the Fiat Grande Panda in Europe and the Ram 1500 Ramcharger in the United States, an electric pickup equipped with a combustion engine that serves as a generator to reduce range anxiety. Possible relief could come from the relaxation of European emissions regulations, but according to Jefferies analysts, efforts made so far have not yet led to an increase in market share.