Carlos Tavares, the highly regarded CEO of Stellantis, has stepped down unexpectedly, citing “increasingly different views” between himself and the automaker’s board of directors. The announcement, made Sunday, marks the end of Tavares’ tenure effective immediately, leaving the world’s fourth-largest automaker searching for a new leader during a challenging period.
In a statement, Stellantis confirmed that its board had accepted Tavares’ resignation and that the search for a new CEO is already underway. The process is expected to conclude in the first half of next year. In the meantime, an interim executive committee will be established under Chairman John Elkann to oversee the company’s operations.
Henri de Castries, senior independent director at Stellantis, explained the circumstances leading to Tavares’ departure. “The success of Stellantis since its creation has relied on perfect alignment between key stakeholders, the board, and the CEO. However, differing opinions have emerged recently, prompting this mutual decision,” de Castries said.
A tenure marked by transformation and challenges
Tavares has been at the helm of Stellantis since its creation in 2021, following the merger of Fiat Chrysler Automobiles and PSA Group, where he previously served as chairman. His leadership was instrumental in orchestrating the merger and turning Stellantis into one of the automotive industry’s most profitable players.
Despite these achievements, 2024 has been a difficult year for the company, particularly in the U.S. market, its largest source of revenue. Poor product investments, soaring vehicle prices, and aggressive cost-cutting measures have led to disappointing financial results. In September, Stellantis adjusted its annual targets downward, followed by a reported 27% decline in third-quarter net revenue.
Stellantis also faced a significant drop in vehicle sales, with global deliveries falling approximately 20% year-over-year in the third quarter. The decline included continued struggles in the U.S., where Tavares had previously acknowledged what he referred to as “arrogant mistakes.”
Cost-cutting under scrutiny
Throughout his tenure, Tavares made cost-cutting a central strategy, aiming to save €8.4 billion ($9 billion) following the merger. These measures included restructuring supply chains, reducing operations costs, and shifting some work to lower-cost countries like Brazil and Mexico.
The company also reduced its workforce significantly, cutting 47,500 jobs—15.5% of its global headcount—between December 2019 and the end of 2023. Further layoffs this year in the U.S. and Italy have fueled tensions with unions, including the United Auto Workers (UAW), which has openly criticized Tavares’ leadership and called for his removal.
Stellantis’ U.S. dealer network has also voiced frustrations, citing inflated vehicle inventories and insufficient financial support from the company to move products.
Fallout and future direction
The departure of Tavares comes at a critical juncture for Stellantis. The company faces mounting challenges, including rebounding from a year that saw its U.S.-listed shares plummet 43%. While Tavares defended his strategies as necessary for the company’s long-term success, some industry insiders argue that the cost-cutting measures may have gone too far, creating operational strain and diminishing the brand’s competitiveness in key markets.
Tavares addressed these criticisms earlier this year, asserting that the company’s struggles were not solely attributable to budget cuts. “It’s easy to scapegoat cost-cutting when results fall short,” he said in July.
As Stellantis prepares for a leadership transition, questions remain about how the automaker will navigate its current challenges. With global sales under pressure and internal dissent among employees and dealers, the incoming CEO will inherit a company at a crossroads.
The search for Tavares’ successor will be pivotal, as Stellantis seeks to realign its strategies and restore confidence among stakeholders. For now, the company’s leadership must focus on stabilizing operations and charting a course toward recovery in a competitive and rapidly evolving automotive industry.
