Stellantis CEO Resigns, US Proposes $7.54B Loan

On Sunday, Stellantis CEO announced a sudden resignation. On Monday, December 2, 2024, the U.S. Energy Department announced plans to provide up to $7.54 billion in loans to StarPlus Energy, a joint venture between Stellantis and Samsung SDI, for building two lithium-ion EV battery plants in Indiana.

Stellantis Had Initial Success

Stellantis, formed from the 2021 merger of Groupe PSA and Fiat Chrysler, initially delivered on some promised synergies, including cost savings and shared development of EV and software technologies. However, its American brands—Jeep, Ram, Dodge, and Chrysler—are struggling under Stellantis’ ownership, facing declining sales, bloated inventories, and challenges in adapting to evolving market demands. These issues have raised concerns about the company’s ability to effectively manage its diverse global portfolio and maintain the strength of iconic American automotive brands.

“At first, the market was quite doubtful whether Stellantis could pull off the $5 billion in synergies between the two companies that they had announced,” said Daniel Roeska, managing director at Bernstein.

Stellantis did better than that in 2023, a banner year with record sales, record profits, and record free cash flow. However, behind those results, all kinds of problems lurked.

“They managed to pull off $8 billion,” said Roeska. “And then they stopped counting.”

Stellantis CEO Carlos Tavares resigned unexpectedly, effective December 1, 2024, amidst internal disagreements between the board, major shareholders, and the CEO. This decision follows a challenging period for Stellantis, marked by a profit warning in October 2024 and a 40% decline in market value this year. The company faces difficulties in the U.S. market, where declining demand for SUVs and pickups has led to revenue drops. John Elkann, chairman of Stellantis’ board, will lead a temporary leadership committee until a new CEO is appointed by mid-2025.

Tavares faced criticism following a profit warning in September 2024, driven by declining North American sales. Tavares resigned as Stellantis CEO amid internal disagreements and ongoing challenges, including a forecasted cash burn of up to $10.6 billion due to sluggish North American sales and inventory build-up. The profit warning in September 2024 triggered management reshuffles, though Tavares initially planned to retire at the end of his term in 2026. Stellantis shares have declined 40% this year, significantly underperforming rivals like GM and Ford. Major shareholders, including EXOR, the Peugeot family, and the French government, acknowledged Tavares’ contributions to Stellantis’ formation.

Stellantis dealers have raised concerns over declining U.S. sales, down 17% year-over-year through Q3 2024, particularly affecting Dodge, Ram, Jeep, and Chrysler. Dealers face difficulty selling 2023 models, with inventory issues like 112 days of supply for Ram 1500 trucks and Jeep Wagoneers—much higher than competitors like the Chevrolet Silverado. These challenges were outlined in a September letter to Carlos Tavares, reflecting mounting frustration and compounding the automaker’s broader struggles.

“North America operations were highly profitable and kind of seen as a little bit of a cash cow,” said Stephanie Brinley, director of the AutoIntelligence unit at S&P Global Mobility. “Maybe the idea was it could run itself with not much influence. But it still needed support.”

Carlos Tavares’ resignation from Stellantis was partly driven by tensions with the board, which accused him of focusing on short-term fixes to safeguard his reputation instead of prioritizing the company’s long-term interests. His tenure saw conflicts with unions, layoffs, inventory struggles, and tensions with governments. Under his leadership, Stellantis formed through a merger and managed 14 brands, some of which he warned could be discontinued due to underperformance. Analysts and stakeholders are now calling for new strategies and leadership to steer the company forward.

Stellantis EVs

Stellantis is a multinational automotive company that owns several brands, including Chrysler, Citroën, Fiat, and Jeep. Some of the electric vehicles (EVs) that Stellantis is currently working on or has released in the US include: Jeep Wagoneer S, Dodge Charger, Ram 1500 REV, Fiat 500e, and the Ram Promaster Van.

Traditional automakers like Stellantis, Ford and GM have struggled with electrification. Producing EVs is much easier for a fully electric brand, such as Rivian. For traditional OEMs, the cost involved with switching from internal combustion engine (ICE) to EVs is time-consuming and very costly. Stellantis hasn’t produced EVs in great volumes yet, one of the cornerstones of automotive profitability.

With the expected political turbulence in the American EV market in 2025, Stellantis will face even greater challenges.

US Proposes $7.54B Loan to Stellantis, Samsung SDI Battery Joint Venture

The U.S. Energy Department announcement of plans to provide up to $7.54 billion in loans to StarPlus Energy came as welcome news to Stellantis, the day after its release of news about Tavares. StarPlus is a joint venture between Stellantis and Samsung SDI. The loan is for building two lithium-ion EV battery plants in Indiana. The conditional commitment includes $6.85 billion in principal and $688 million in capitalized interest, pending finalization. This investment aims to boost U.S. EV battery production capacity and support the transition to sustainable transportation.

The StarPlus Energy venture, a collaboration between Stellantis and Samsung SDI, will produce batteries for Stellantis EVs at two plants in Kokomo, Indiana. At full capacity, these facilities are expected to generate 67 GWh annually, enough to power approximately 670,000 vehicles. However, it is uncertain if the $7.54 billion loan from the U.S. Energy Department can be finalized before President-elect Donald Trump assumes office, given his critical stance on the Biden administration’s EV incentives.

Stellantis plans to open two battery plants in Indiana under its StarPlus Energy venture with Samsung SDI, starting in 2025 and 2027, producing 67 GWh annually. Additional projects include a Canadian gigafactory with LG Energy Solution. The DOE aims to fund Stellantis with $334.8 million for converting the Belvidere Assembly Plant and $250 million for upgrading Indiana’s Transmission Plant. Recent DOE actions include loans for Rivian and Ford’s ventures, highlighting the government’s push for EV sector growth through the Advanced Technology Vehicles Manufacturing program.

Ford’s Battery Venture

In June 2023, the U.S. Department of Energy (DOE) announced plans to lend up to $9.2 billion to a joint venture between Ford Motor Company and SK On, a South Korean battery manufacturer. The funds aim to support the construction of three battery plants in Tennessee and Kentucky, marking the largest loan commitment in the history of the DOE’s Advanced Technology Vehicles Manufacturing (ATVM) program. The project focuses on scaling battery production for Ford’s electric vehicles, though the loan has yet to be finalized.

Rivian’s Expansion Plans

In November 2024, the DOE proposed a loan of $6.6 billion to Rivian to finance the construction of a new manufacturing plant in Georgia. The facility is part of Rivian’s strategy to produce smaller and more affordable electric vehicles by 2028, aimed at expanding its customer base. This initiative underscores Rivian’s long-term growth in the competitive EV market, with the plant expected to create significant jobs and boost EV adoption.

Both efforts highlight the DOE’s commitment to accelerating the U.S. EV industry through strategic funding initiatives.