Stellantis NV’s STLA struggles in 2024 have been nothing short of profound.

The company's stock has plummeted 47% year to date, nearly halving its market value amid a confluence of negative factors, now further compounded by the departure of the CEO Carlos Tavares.

Tavares’ unexpected resignation came more than a year ahead of his planned retirement in early 2026, leaving investors grappling with uncertainty.

The automaker continues to face mounting challenges, including plunging electric vehicle (EV) sales, bloated inventories and intensifying competition from China.

Shares of Stellantis Inc. fell by nearly 7% on the session immediately after Tavares’ exit.

Can Stellantis chart a new course without its captain at the helm?

Tavares' Leadership: A Mixed Legacy

Tavares became CEO of Stellantis in January 2021, overseeing the merger of France's PSA Group and Italy's Fiat Chrysler Automobiles (FCA) that created the world’s fourth-largest automaker.

Notably, Tavares was the highest-paid executive in the automotive sector, earning $39 million in 2023. Despite his bold initiatives, the automaker's EV sales underperformed in 2024, with some insiders citing this as a potential flashpoint between Tavares and other Stellantis stakeholders.

His nearly four-year tenure ends with mixed results. While he spearheaded ambitious cost-cutting and electrification efforts, Stellantis shares have fallen by nearly 20% since the merger.

In late March 2024, Stellantis stock was up more than 25% year-to-date, but a sharp downward spiral in the last seven months erased those gains and more. Tavares' outspoken leadership style and focus on driving efficiencies created tensions with stakeholders, particularly in North America and Europe.

Back in late September, Stellantis issued a profit warning that acted as a key catalyst, driving its stock to tumble to lows not seen in more than two years.

Analyst Commentary: Leadership Uncertainty Looms Large

George Galliers, an analyst at Goldman Sachs, weighed in on the implications of Tavares' resignation.

"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," Galliers said.

Galliers also highlighted Stellantis' struggles in North America and Europe, emphasizing inventory issues, delayed product launches, and regulatory pressure surrounding the transition to battery electric vehicles (BEVs). He added that the automaker's profitability in emerging markets has remained relatively strong, setting it apart from peers.

"Even in 2024, the levels of profitability achieved by Stellantis in emerging markets are notably stronger than those of its competitors. However, the stewardship of Stellantis — producing five to six million units annually in multiple jurisdictions — will be a substantial challenge for the outgoing CEO's successor," Galliers said.

Internal Struggles, Industry Pressure

“Stellantis’ board members were reportedly in full agreement on the decision to sever ties.”

Tavares' departure also underscores the internal and external pressures facing the automaker.

During Stellantis' 2024 financial downturn, reports emerged of growing friction between Tavares and key stakeholders, including U.S. dealers, workforce representatives and political leaders in Italy and the U.K.

Chairman John Elkann attributed Tavares’ resignation to "diverging views" on the company's strategic direction.

At Goldman Sachs’ 15th Annual Industrials and Autos Conference earlier this year, Tavares acknowledged the industry's ongoing challenges, describing it as a “Darwinian race” that required automakers to prioritize cost-saving measures and operational efficiency. However, his rigid approach may have deepened divides within the company during an already volatile period.

Stellantis has also been slow to adapt to evolving consumer demand in the EV market. The automaker lags behind industry leaders Tesla and BYD, as well as established rivals such as Volkswagen and Ford, in electrification. This underperformance may have played a significant role in Tavares' abrupt exit.

What's Next for Stellantis?

The leadership vacuum at Stellantis raises questions about the company's strategic direction moving forward.

In response, the Stellantis board has launched a search for Tavares' replacement, with plans to finalize the appointment by mid-2025. During this transition, Elkann will oversee a newly formed executive committee that will steer the automaker through this critical period.

Investors are now looking for clarity on who will step in to lead the automaker at a time when the automotive industry is undergoing one of its most transformative periods in history.

While Stellantis continues to face challenges, the next CEO will inherit a complex yet globally significant portfolio. The stakes are high and the company's path forward will likely shape the future of the automotive industry at large.

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