Stellantis CEO Carlos Tavares Abruptly Quits Over "Different Views" With Board 

Stellantis NV Chief Executive Officer Carlos Tavares has abruptly resigned from the automaker, citing 'different views' with the board of directors, according to an overnight press release. This development comes as auto demand in key markets, including North America, Europe, and China, continues to deteriorate, plunging the entire industry into a vicious downturn. 

"The process to appoint the new permanent Chief Executive Officer is well under way, managed by a Special Committee of the Board, and will be concluded within the first half of 2025," Stellantis stated, adding, "Until then, a new Interim Executive Committee, chaired by John Elkann, will be established." 

Stellantis' Senior Independent Director, Henri de Castries, commented on Tavares' departure: "However, in recent weeks different views have emerged which have resulted in the Board and the CEO coming to today's decision."

The world's fourth-largest carmaker has recently warned about sliding sales and bloated inventory in North America, which led to the profit warning announced in September. By early October, Stellantis CFO Natalie Knight informed her team about the need to take "drastic measures" to shore up the Jeep and Ram parent's finances. Then, in recent weeks, after a nightmare of a year, the automaker began pausing production of certain models. 

Goldman's George Galliers commented on Tavares's departure to clients this AM:

CEO resignation confirmed - Yesterday evening, Stellantis confirmed that it had accepted the resignation of its CEO, effective immediately, citing different views on future direction. Previously, the CEO was due to retire in early 2026, hence, yesterday's departure is just over 12 months earlier than expected. Stellantis confirmed its FY24 guidance for an adj. operating income margin of 5.5-7.0% (GSe 6.2%, company compiled consensus 6.2%) and ind. free cash flow of -€5 to -€10bn (GSe -€7.3bn, cons -€6.9bn). While the outgoing CEO has a long-standing reputation and this announcement is earlier than expected, in light of recent tensions with stakeholders and the step-down in 2024's financial performance, we expect the market to focus on the likely successor. The CFO is due to attend our 16th Annual Industrials and Autos Conference this week.

Press reports of tensions with key stakeholders - Stellantis' financial performance this year has fallen short of expectations, with the company suffering from excess inventory in North America and late to market product launches in Europe. At our 15th Annual Industrials and Autos Conference, the departing CEO spoke about the industry facing a Darwinian race and, therefore, the need to drive efficiencies and cost savings. However, over the course of 2024, press reports suggest this has created tensions with stakeholders including Stellantis' US dealers, US workforce, and politicians in Italy and the UK. In addition, the industry continues to undergo significant pressure as a result of the ongoing transition to BEVs, necessitated by regulation in the UK and Europe, and the potential risk from Chinese competition.

Successful historical performance under the outgoing CEO - The outgoing CEO oversaw the creation of Stellantis through the merger of PSA and FCA, with STLA going on to report a strong 13.4% adj. operating margin in FY22 and 12.8% in FY23 as well as combined ind. FCF >€23bn during the period. Previously, as CEO of PSA, he oversaw a turnaround that led PSA to increase adj. op. margins from 1.5% in 2014 to 8.5% in 2019 with adj. op. income seeing an 8x increase. Even in 2024, we believe the levels of profitability achieved by STLA in emerging markets is notably stronger than peers. Past financial turnarounds, and industry-leading margins were achieved through rigorous pricing and a tough stance on cost. Despite the downturn in STLA's N.American and European performance, in 2024, as a producer of 5 to 6mn units operating in multiple different jurisdictions, the stewardship of Stellantis will be a substantial role for the outgoing CEO's successor.

Galliers reaffirmed a "Buy" rating on Stellantis shares trading in Europe, noting, "We apply a P/E target multiple of 5.0x to our 2025 EPS to derive a 12-month price target of €16/$17." 

Shares in Milan plunged 8.5% on the news, the lowest intraday print since July 2022. On the year, shares have fallen 45%. 

Here's what other Wall Street analysts had to say (list courtesy of Bloomberg):

Bernstein (market-perform)

• Analysts led by Daniel Roeska struggle to "identify any scenario under which these events can be positively spun as far as the stock price is concerned"
• Say investors will now likely have to wait until the arrival of the next CEO for more reliable answers
• Think the market will be wondering why the board "considered that not having a permanent CEO for some months was preferable to keeping the current CEO"

RBC (sector perform)

• Analyst Tom Narayan says this announcement is a surprise, but wonders if it was related to the CEO's already planning to retire in early 2026
• Management changes made in early October did seem "odd" and this could also have played a role
• "Entirely possible that Stellantis can get through this rough patch," but a bunch of potential headwinds such as CO2 compliance in Europe, Chinese competition, risk of US tariffs leave RBC on the sidelines

Morgan Stanley (overweight)

• Think overall investor opinions of the CEO were favorable, despite the company's "considerable underperformance" this year, analyst Javier Martinez de Olcoz Cerdan writes
• Tavares was overall recognized for role in delivering merger, efforts on cost-cutting, commitment to execution and "agile" Chinese OEM strategy
• Wonders if exit may herald a new strategic direction, creating uncertainty for investors until a new CEO is appointed

JPMorgan (overweight)

• Analyst Jose Asumendi says exit of a CEO and a CFO in such a short period seems unprecedented, creating "challenge" for investors
• Chairman John Elkann, who will lead the interim leadership committee, does have good track record across differing industrial groups which provides "solid base" for now
• However, there is unlikely to be any significant major earnings improvement priced in by investors for FY25 until the management team is reset

Jefferies (hold)

• Not entirely surprising news, but leaves the company without a CEO at a time when a number of "critical decisions" need to be made, analyst Philippe Houchois writes
• Understands that Tavares wanted to actively contribute to turning around performance before his previously planned 2026 exit, but that the board likely sanctioned his proposals or management style

European automakers have been struggling as a whole.

The collapse in profitability under Tavares' watch has been disastrous.