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The Downfall of Stellantis CEO Tavares
Philipp Raasch
December 12, 2024
Welcome to the first edition of The German Autopreneur!
In February I launched a German newsletter called "Der Autopreneur". Since then it grew to over 15,000 readers. Many asked for an English edition – and here it is. I'm excited to have you join from the start!
My mission here is simple: Help auto industry professionals navigate transformation.
I keep things personal, direct, and simple. Feel free to reply to any of my emails with your thoughts. I read every message and continuously improve this newsletter based on your feedback.
Here you can learn more about me and my background.
Now let's dive in.
This week's story: Stellantis CEO Carlos Tavares steps down. The reason? His cost-cutting approach backfired.
Let's look at what happened at Stellantis – it reveals a lot about the challenges our industry faces.
Reading time: 5 minutes
🪂 The Rise and Fall of Carlos Tavares (and What's Next for Stellantis)
AI-generated illustration
Stellantis' board has had enough of Carlos Tavares. The CEO of the world's fourth-largest automaker steps down with immediate effect.
Across the industry, they called him "Performance Psychopath." His reputation reflected his approach:
He ran the company with absolute control
He cut costs without mercy
He focused only on numbers
With this strategy, he achieved something remarkable: He turned around PSA, the company behind Peugeot, Citroën, and Opel. And in 2021, he merged PSA with Fiat-Chrysler to create Stellantis.
2023 looked perfect: 13% profit margin. This was the moment to ease off the extreme cost-cutting. Instead, he pushed harder.
What followed:
Product quality dropped
New cars got delayed
They increased prices to protect margins
Then everything collapsed:
Profits crashed. The stock fell 40%
Dealers couldn't sell their expensive cars
Suppliers cut ties – fed up with constant pressure and unfair treatment
And even in Europe, competitors grabbed market share
I spoke with an insider who described the situation:
"They handed out severance packages like candy. Our best people left, one after another. The workload kept growing for fewer and fewer people. The pressure became unbearable."
In November, the situation came to a head. The board questioned his extreme targets. His response: "This isn't your business - stay out."
His solution: Even more cost pressure.
The board had to act.
They pulled the emergency brake.
Demanded his immediate resignation.
"He cost-cut the company to death," my insider explained. In fact, Tavares had recognized that Stellantis needed to change. He set the right target. But he tried to force change through the wrong means.
His leadership style made honest feedback impossible. Nobody dared report problems up the chain, fearing his reactions.
My perspective:
The Tavares case perfectly shows the central dilemma traditional automakers are facing.
Our industry is transforming:
From hardware to software
From combustion to electric
From manual to autonomous driving
In short: Everything is changing.
Facing these massive changes, many established companies feel lost searching for answers. They retreat to what worked in the past. They focus on squeezing the last bits of efficiency from their old business model.
Look at today's most successful automakers in future technologies: They're led by tech CEOs. These leaders are rethinking the entire business - from product to business model.
Tavares saw that Stellantis needed to change. He got that right. But he tried to force transformation through cost cuts and numbers alone.
Here's the problem: In times of disruption, that's not enough.
When you only optimize instead of reinventing yourself, you still decline. You might be a bit more efficient on the way down, but you're still going down.
Stellantis will now be led by an interim committee under John Elkann. A new CEO should be found by mid-2025. After months of uncertainty, the company is finally seeing movement.
From what we hear, Tavares' fundamental strategy will remain.
The crucial question is: Which path will the company choose?
Will they again opt for a traditional auto executive who continues to optimize - essentially a Tavares lite?
Or will they dare to choose someone who thinks radically different - perhaps even a tech CEO?
That's all for today.
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Until next week,
— Philipp
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