Stellantis, the world’s fourth-largest automaker, is undergoing a significant leadership transition following the resignation of its CEO, Carlos Tavares, CNBC reports.
The departure of Tavares, who played a pivotal role in the merger of Fiat Chrysler and PSA Groupe, has been attributed to what insiders describe as strategic missteps, particularly in the company’s US operations. The decision marks a shift in direction for the multinational automaker, as it seeks to rebuild strained relationships with key stakeholders and address the challenges it faces in North America.
Carlos Tavares, who had been at the helm of Stellantis since its formation in 2021, resigned abruptly on December 1, 2024. The official reason cited by Stellantis was “different views” between Tavares and the board of directors. However, multiple sources from within the company have revealed that his leadership style and strategic decisions were central to the departure. According to current and former employees, Tavares’ intense focus on cost-cutting, his pursuit of double-digit profit margins under the “Dare Forward 2030” plan, and a reluctance to adapt to the US market environment alienated executives, employees, and suppliers.
Tavares’ own assessment of his tenure came during a June investor event when he acknowledged that the company had been “arrogant” in its approach. He specifically cited mismanagement of certain US production plants and the company’s failure to adjust business plans amid shifting market conditions. His critics echoed this sentiment, accusing him of being dismissive of local expertise and resistant to US market-specific input. One source noted that the pressure to achieve cost reductions felt like having “a pistol to your head.”
The consequences of these strategic decisions were felt most acutely in the United States, where Stellantis faced criticism from dealers, suppliers, and unions. Tavares’ approach included streamlining vehicle production and cutting costs through outsourcing engineering work to lower-cost providers, including French consultancy Capgemini. One controversial move involved eliminating the V-8 Hemi engine, a decision that met resistance from US executives and dealers, who argued it would negatively impact consumer demand.
The company also cut production of key models, like the Jeep Cherokee and Dodge Charger, without immediate replacements lined up, resulting in a bloated inventory of unsold vehicles. Discontent grew among employees, especially after Tavares announced that he would briefly visit the US to address operational challenges during his European summer break — a move that was perceived as tone-deaf by American workers who do not typically receive extended summer holidays.
A former Stellantis executive claimed that while Tavares had initially stated that the “center of the company is somewhere in the Atlantic,” it eventually became clear that Stellantis’ priorities were being dictated from France, reflecting PSA Groupe’s influence in the merger. Meanwhile, regular meetings in the middle of the night, intended to accommodate Tavares’ European schedule, frustrated US employees.
The dissatisfaction was not limited to internal stakeholders. Investor confidence in Stellantis dwindled as its US-traded shares plummeted 43% in 2024. By comparison, competitors like General Motors saw their stock rise 55%, while Ford experienced a smaller decline of 9%. Analysts at Bernstein noted that while CEOs in the automotive industry are often celebrated as transformative figures, one misstep can lead to a dramatic fallout.
Tavares’ cost-cutting philosophy, while effective in previous roles at PSA Groupe and General Motors’ Opel division, proved divisive at Stellantis. His push for efficiency led to layoffs of roughly 40,600 employees globally between 2020 and 2023, with further reductions in 2024. In Europe, austerity measures reportedly reached extremes, with reports of coffee machines being transported over 100 miles to avoid purchasing new equipment at certain factories. This cost-driven approach led to ongoing friction with the United Auto Workers (UAW) union and other labor groups, who criticized Stellantis for treating its workforce unfairly.
Shawn Fain, president of the UAW, had been calling for Tavares’ dismissal for months, framing it as a step toward better treatment for the company’s workforce. Following the announcement of Tavares’ resignation, Fain welcomed the move, calling it “a major step in the right direction for a company that has been mismanaged and a workforce that has been mistreated for too long.”
Whoever succeeds Tavares as CEO will face a complex landscape. The new leader will be tasked with rebuilding relationships with US employees, suppliers, and dealers, as well as restoring the company’s credibility with investors. US dealer council head Kevin Farrish has already signaled optimism, pointing to changes made by newly appointed North American Chief Operating Officer Antonio Filosa.
The next CEO must also address production strategy, particularly the balance between electric and internal combustion engine (ICE) vehicles. While Tavares prioritized electric vehicles as part of the “Dare Forward 2030” initiative, some US leaders argued that gas-powered models should have been maintained longer to sustain sales. The company must now navigate this divide as it continues its EV transition amid intensifying competition from American rivals.
Stellantis Chairman John Elkann has stepped in to manage operations as part of a new interim executive committee. Elkann, who is also the head of Exor, Fiat’s holding company, has been active in damage control, meeting with dealers and visiting Stellantis sites in the US, Italy, and France. He is reportedly optimistic about the company’s future, and a formal CEO appointment is expected during the first half of 2025.
Tavares’ departure serves as a reminder of the delicate balancing act required of automotive CEOs. While cost-cutting and efficiency are necessary for profitability, a lack of sensitivity to regional market needs, employee morale, and stakeholder relationships can have serious consequences. As GM President Mark Reuss remarked:
“You can’t cut your way to growth.”
Stellantis’ board appears to have recognized this lesson, and the company is now working to repair damaged relationships. Among the first signs of this shift is the end of the controversial “Darwin” cost-cutting program. According to sources, the program — named after Charles Darwin’s theory of survival of the fittest — was symbolic of Tavares’ survival-of-the-strongest philosophy. Elkann signaled a shift in corporate strategy:
“Darwin is dead because we intend to survive.”
