MILAN, Italy: Stellantis' decision to rein in its electric-vehicle ambitions landed with a thud on markets on February 6, as the automaker unveiled a sweeping 22.2 billion euros (US$26.5 billion) charge that sent its shares plunging to their lowest level since the group was formed in 2021.

The writedowns, among the largest yet as global carmakers reassess earlier bets on rapid electrification, come as weaker-than-expected EV demand collides with policy shifts, including the Trump administration's rollback of U.S. subsidies. Stellantis' Milan-listed shares slumped as much as 30 percent, leaving the value of the charges larger than the company's entire market capitalisation.

The move places Stellantis alongside rivals such as Ford and General Motors, which have also announced multi-billion-dollar impairments tied to scaling back EV plans. For traditional automakers, the challenge is acute: balancing investment between electric and combustion-engine models while facing fast-rising Chinese competitors and higher trade barriers.

Stellantis is especially exposed because it relies on high-margin Jeep and Ram pickup sales in the United States, where EV demand has lagged. Under former chief executive Carlos Tavares — who was forced out in late 2024 after a collapse in U.S. sales — the group had targeted fully electric vehicles to make up all European sales and half of U.S. sales by 2030.

Those assumptions have proved wide of the mark. Fully electric cars accounted for 19.5 percent of European sales last year, and just 7.7 percent in the United States.

On a call with reporters, current CEO Antonio Filosa said those expectations were "overly optimistic."

"What we are announcing today is an important strategic reset of our business model … to put our customer preferences back at the centre of what we do, globally and in each region," he said.

Filosa stressed that while Stellantis has pivoted toward launching more fossil-fuel models in the U.S., the group is still "investing in electrification."

Analysts said the scale of the writedown underscores how badly some manufacturers misread the pace of the transition. Russ Mould, investment director at AJ Bell, said the move showed Stellantis "got it wrong on how quickly the world would transition from combustion engines to electric power."

He added that the growing success of Chinese rivals also "begs the question as to whether Stellantis' frustration over its EV sales is linked to market issues or that drivers simply don't like its vehicles."

The charges, which will be booked in Stellantis' second-half 2025 results, also reflect quality issues that Filosa blamed on aggressive cost-cutting under Tavares. Those problems have forced the company to hire 2,000 engineers globally. The writedowns include reductions to the EV supply chain, revised warranty assumptions due to poor product quality, and previously announced job cuts in Europe.

Around 6.5 billion euros of the charges relate to cash payments expected to be spread over four years, starting in 2026. Citi analysts warned that "the magnitude and larger cash-out component… is a key negative."

Filosa began scaling back the group's EV ambitions last year, including agreeing this week to sell Stellantis' 49 percent stake in a Canadian battery joint venture to partner LG Energy Solution. Still, some analysts caution against an overcorrection. Gartner analyst Pedro Pacheco said there was a risk of "overreaction in terms of the strategic pivoting," adding that getting the balance right could be critical to the company's survival.

Stellantis now expects a preliminary net loss of 19 billion euros to 21 billion euros in the second half of fiscal 2025 and said it will not pay a dividend this year. It forecast industrial cash burn of 1.4 billion euros to 1.6 billion euros for the period, with a return to positive industrial free cash flow expected in 2027.