In a dramatic turn of events that has shaken the automotive industry, Carlos Tavares was removed from his position as CEO of Stellantis on December 1, 2024. This departure, happened nearly two years before his expected retirement.
The Birth of an Automotive Giant
Stellantis’s story began in October 2019, when Fiat Chrysler Automobiles (FCA) and PSA Group announced their intention to merge. The deal became official on January 16, 2021. The merger, valued at $50 billion, brought together an impressive portfolio of brands: FCA contributed Chrysler, Dodge, Jeep, Ram, Fiat, Alfa Romeo, and Maserati, while PSA Group brought Peugeot, Citroën, DS, and Opel/Vauxhall.
The reasons for this merger were: the need for more funds, in order to invest in electric vehicles and autonomous technology, potential cost savings through shared online platforms, and enhanced geographic diversification.
Global Position and Market Impact
Since its formation, Stellantis has maintained its position as the world’s fourth-largest automaker, selling approximately 6–7 million vehicles annually across more than 130 countries.
Market Reality at the Dealership Level
A revealing insight from Peugeot’s dealership in Nice, France, highlights the disconnect between corporate strategy and market reality. Their current available models reflect Stellantis’s push towards electrification, with 7 hybrid and 7 electric models outnumbering the 11 fuel/diesel options.
However, customer preferences tell a different story. Despite the broader range of electric and hybrid offerings, buyers continue to favor traditional fuel/diesel vehicles, primarily due to their lower price. The dealership also notes that concerns about electric vehicle maintenance further discourage potential buyers. Their 2025 market projection suggests resistance to electric vehicles will persist for at least five more years, with sales continuing to favor diesel and, to a lesser extent, hybrid models.
This paradox — where the available eco-friendly models outnumber traditional options, yet fail to capture market preference — illustrates the challenges Stellantis faces in its transition strategy. It suggests that while the company is pushing toward electrification, consumer readiness and market conditions may not be aligned with these corporate ambitions.
The Rise and Fall of Tavares
Tavares’s journey at Stellantis is a story of remarkable success followed by a dramatic downfall. Known for his “cost-killer” approach, he had previously achieved impressive deals, one of them being the merger itself, that created Stellantis in 2021.
However, after two exceptional years, Stellantis’s financial situation deteriorated rapidly. His relentless pursuit of profitability, became his undoing. The group’s high pricing strategy began driving away potential customers, leading to falling market shares that strained the company’s cash flow.
The Final Act and Financial Implications
The decision to remove Tavares came at the initiative of John Elkann, the Agnelli family heir and Stellantis’s chairman. Tavares, was one of the highest-paid executives, earning €17.8 million in 2023 alone and for that, his exit package has drawn significant attention. His departure compensation is expected to be substantial, including retirement benefits of approximately €12.75 million.
Legacy and Future Challenges
Tavares’s departure opens a period of uncertainty for Stellantis. The board’s decision to act without having a successor in place, shows how hastily this decision was taken. Now, the challenge ahead is not merely finding a new CEO but also restructuring the management system.
The end of the Tavares era at Stellantis serves as a fine example about the dangers of pursuing profitability at all costs and the importance of balanced corporate governance. As for now, the automotive industry continues its electric transformation. The one thing that remains? The market persuation.
