The automotive world was shaken this weekend with the abrupt resignation of Carlos Tavares, the CEO of Stellantis. Announced on Sunday, the company’s board has accepted Tavares’ resignation, effective immediately. This resignation was unexpected, particularly as Tavares had only recently announced plans to retire at the end of his contract in early 2026. The nature of his exit raises questions about internal issues within Stellantis and the strategic direction of one of the world’s largest automotive groups.
Stellantis attributes the decision to a divergence in views that emerged between Tavares and the board of directors, describing the prior synchronization between shareholders, the board, and Tavares as “perfect.” This strong emphasis on alignment underscores a fundamental principle in corporate governance, where harmony among leadership is crucial for effective strategy implementation. Henri de Castries, Stellantis’ senior independent director, made clear in a public release that recent weeks had seen a notable shift in perspectives, leading to the conclusion that Tavares’ leadership no longer aligned with the board’s objectives.
The board has signaled that the search for Tavares’ successor is already underway, with expectations set for completion in the first half of next year. In the interim, John Elkann, the chairman, will head a new executive committee. The board’s structured approach to management transitions is a positive sign, indicating an effort to stabilize the company in a time of uncertainty.
Tavares’ departure comes against a backdrop of disappointing financial outcomes. Stellantis has faced challenges, particularly in its U.S. market—historically a vital cash generator for the company. In recent months, the firm has cited underinvestment in new products, inflated prices, and a heavy-handed cost-cutting strategy as contributing factors to this underperformance. The automaker’s financial forecast has suffered significantly, with a noteworthy 27% decline in third-quarter net revenues. The stock’s downward trajectory—plummeting roughly 43% in 2024—reflects investor concerns regarding the company’s future, compounded by the leadership shift.
Over the years, Tavares has been commended for his role in the merger of Fiat Chrysler Automobiles and PSA Groupe, which birthed Stellantis in 2021. However, ongoing setbacks in the U.S. market have severely tarnished his legacy. Observers point toward mismanagement, driven by excessive cost-reducing measures, as a significant contributor to the current malaise.
Under Tavares’ leadership, Stellantis implemented substantial cost-cutting initiatives, which included a self-reported reduction of €8.4 billion (about $9 billion) following the merger. These measures focused on revamping the supply chain and offshoring roles to lower-cost countries such as Mexico and Brazil. Yet, multiple sources within the company have characterized these cuts as extreme, leading to operational difficulties primarily in the U.S. market.
Tavares refuted the idea that these cost-cutting measures led to poor performance, suggesting that when results falter, scapegoating easily targets the budget cuts. The oddity of this perspective lies in the significant reductions in headcount, affecting 15.5% of employees—or roughly 47,500 individuals—from December 2019 through 2023. The backlash from labor unions, particularly the United Auto Workers, has become palpable as layoffs and dwindling production levels have pushed workers to demand Tavares’ removal for a range of unmet expectations.
As Stellantis transitions to new leadership, it faces the daunting task of overcoming these challenges while restoring investor and public confidence. The new executive must formulate a strategy not only to improve the U.S. operations but also to re-envision how Stellantis can innovate and compete in an increasingly competitive global market.
The loss of a leader like Tavares—who was celebrated for driving profitability and orchestrating a major merger—poses a significant risk. The company must harness this moment of change as an opportunity to redefine its strategic course for the future, recalibrating its dealings with both employees and stakeholders. How Stellantis navigates this period of instability may determine its trajectory in the fast-evolving automotive landscape, where consumer preferences and technological advancements continue to challenge traditional methodologies.