Stellantis was assembled in January 2021 to build strength from weakness. Fiat Chrysler Automobiles and France's PSA Group each struggled independently with insufficient scale, limited R&D budgets, and vulnerability to industry disruption. Together, they formed the world's fourth-largest automaker with €170 billion in revenue, 14 brands, and projected cost savings of €3.7 billion annually.
The rationale was simple: pool resources, spread costs, survive the transition to electrification. North America generated roughly 65 percent of FCA's revenue. Europe anchored PSA's business. Complementary geographic strengths. Minimal brand overlap. A textbook merger of equals, at least on paper.
Four years later, that foundation is fracturing. The regulatory environments that once pointed in the same direction have diverged sharply. Trade barriers erected by the Trump administration are choking cross-border integration. And former CEO Carlos Tavares, who stepped down in December 2024 after mounting losses, has publicly warned the company could splinter apart.
"I am worried that the three-way balance between Italy, France, and the U.S. will break," Tavares wrote in a book published in October 2025, according to MoparInsiders. "The group's survival as a standalone company will depend on management paying attention to unity every day."
His most striking prediction: "One possible scenario, and there are many others, could be a Chinese manufacturer one day making a bid for the Europe business, with the Americans taking back the North America operations."
Regulatory Divergence
When FCA and PSA announced their merger in December 2019, both the United States and Europe were tightening vehicle emissions standards. The Biden administration's ambitious climate agenda aligned roughly with the European Union's path toward phasing out internal combustion engines by 2035. Stellantis could develop electric vehicles and powertrains for both markets simultaneously, spreading R&D costs across a larger base.
That synchronization collapsed in 2025. President Trump dismantled Biden-era fuel economy regulations, withdrew EPA emissions targets, and eliminated the $7,500 federal EV tax credit. The regulatory pressure driving American automakers toward electrification vanished overnight. Meanwhile, Europe doubled down on emission standards, though the EU weakened its 2035 combustion ban in December 2025 after industry pressure, applying it to only 90 percent of new vehicles.
Stellantis Chairman John Elkann told shareholders in April 2025 that US tariffs and strict EU emissions standards were putting automakers at risk, according to TRT Global and Reuters. "With the current path of painful tariffs and overly rigid regulations, the American and European car industries are being put at risk," he said.
The EU's emissions rules create what Elkann described as an "unrealistic path to electrification, disconnected from market realities." European governments withdrew purchase incentives abruptly, he noted, and charging infrastructure remains inadequate. Yet automakers face massive fines for missing fleet emission targets.
In the United States, Stellantis confronts layered tariffs on aluminum, steel, parts, and potentially complete vehicles imported from Mexico and Canada. The company estimated tariffs would cost €1.5 billion in 2026, according to Transport Topics reporting from July 2025. That figure represented a €1.2 billion hit in the second half alone, primarily affecting Ram pickup production in Mexico.
Tariffs
Stellantis operates major manufacturing facilities in Mexico producing Ram pickups, commercial vans, and other high-volume models for the US market. Trump's proposed 25 percent tariff on vehicles imported from Mexico directly threatens that strategy. The company faces a brutal choice: absorb the tariff costs and watch profit margins collapse, raise prices and lose market share, or relocate production to the United States at enormous capital expense.
Moody's identified Stellantis as one of the European automakers most vulnerable to Trump's tariff threats, per EV Magazine reporting from January 2025. The assessment focused on the company's heavy reliance on Mexican production for the US market, coupled with declining sales in China and potential EU fines for missing emission targets.
CEO Antonio Filosa, who replaced Tavares in June 2025, announced $13 billion in US investment over four years to address the tariff vulnerability, according to Automotive Logistics reporting from October 2025. The plan includes reopening the idled Belvidere, Illinois assembly plant by 2027 and expanding capacity at facilities in Michigan and other states.
That investment represents a geographic rebalancing away from the trans-Atlantic integration the merger promised. Rather than leveraging Mexican production for cost advantages, Stellantis is being forced to build more vehicles inside the United States to avoid tariffs. The synergies disappear. The regional independence returns.
The EV Write-Off Disaster
In February 2026, Stellantis announced charges exceeding €24 billion (approximately $26 billion), with €14.7 billion related to "re-aligning product plans with customer preferences and new emission regulations in the US," according to reporting from CNN via Local 3 News.
The write-offs reflect canceled EV products and costs of resizing the EV supply chain after massive investments failed to generate returns. The company recorded a net loss for full-year 2025 and announced it would not pay an annual dividend in 2026. Shares fell 30 percent on the news.
Those canceled EVs were developed for regulatory environments that no longer exist. American consumers aren't buying electric vehicles at projected rates. Without tax credits and with Trump eliminating emissions penalties, demand collapsed. Stellantis spent billions preparing for a transition the US government abandoned.
Europe still requires the transition, but at different speeds and with different consumer preferences than North America. The shared platform strategy that justified the merger breaks down when the two largest markets demand fundamentally different products.
What The Split Would Look Like
Tavares's scenario isn't far-fetched. The operational integration between FCA's North American brands and PSA's European marques remains limited four years after the merger. Jeep, Ram, Dodge, and Chrysler serve primarily American buyers. Peugeot, Citroën, Opel, and Vauxhall dominate European markets. The brands don't share showrooms, service networks, or customer bases.
Platform sharing exists but hasn't delivered the synergies promised. Stellantis uses the STLA Medium and STLA Large electric platforms across multiple brands, but production remains regionally concentrated. European factories build European models. American plants build American trucks. Mexican facilities supply North America.
A potential split could look like this:
North American Entity: Jeep, Ram, Dodge, Chrysler, plus Fiat, Alfa Romeo, and Maserati (Italian brands with stronger Latin American presence). Headquarters in Detroit. Manufacturing concentrated in the United States, Mexico, and Brazil. Focused on trucks, SUVs, and performance vehicles for markets that still value internal combustion.
European Entity: Peugeot, Citroën, Opel, Vauxhall, DS Automobiles, plus Lancia. Headquarters in Paris. Manufacturing across France, Germany, Italy, Spain, and potentially partnership production in China. Focused on smaller vehicles, aggressive electrification, and compliance with EU regulations.
The European side could attract acquisition interest from Chinese automakers seeking Western brand equity and European market access, as Tavares suggested. BYD, Geely, or other Chinese manufacturers have both the capital and strategic motivation. Stellantis already partners with Chinese EV maker Leapmotor through a €1.5 billion joint venture formed in October 2023.
The American side could return to independent operation or merge with another Detroit-based automaker facing similar challenges. Ford and GM both struggle with EV losses and tariff exposure. Consolidation among the Detroit Three has been speculated for years, and sites like GaukMotorBuzz.com have covered ongoing industry analysis suggesting the American auto industry cannot sustain three independent mass-market manufacturers long-term.
The Case For Staying Together
Scale still matters. Stellantis remains the world's fourth-largest automaker with global reach that independent FCA and PSA lacked. The company sold 6.9 million vehicles globally in 2025 despite North American struggles. Combined purchasing power, shared component sourcing, and centralized R&D provide advantages that wouldn't survive a split.
The merger has generated cost savings, though not at projected levels. Overlapping engineering centers, redundant platforms, and duplicate administrative functions have been consolidated. Reversing that integration would require rebuilding capabilities each side eliminated assuming the merger was permanent.
Financially, Stellantis maintains €46 billion in industrial liquidity as of year-end 2025, according to the company's February 2026 press release. That represents a 30 percent ratio to net revenue, at the upper end of the company's target range. The balance sheet remains strong despite operational losses.
Filosa struck an optimistic note in February 2026 earnings commentary, telling investors the company expects to improve net revenues, operating margin, and cash generation throughout 2026, with sequential improvement from first half to second half. The "reset" strategy involves $13 billion in US investment, introduction of new models, and renewed focus on regions where the company generates profits.
The Uncomfortable Reality
The bloodstream connecting Stellantis's twin heartlands has slowed to a dribble. Regulatory alignment evaporated. Tariffs punish cross-border integration. EV investments targeted at shared markets generated write-offs instead of returns. The strategic rationale that justified merging two weak companies into one strong entity in 2021 no longer holds.
Whether that forces a split depends on factors beyond Stellantis's control. If Trump's tariffs persist and expand, maintaining integrated North American and European operations becomes financially untenable. If the EU relaxes emission standards while the US maintains protectionist trade barriers, the regulatory environments diverge further.
The company's new CEO inherited a crisis. Tavares left after three years of declining profits, strained labor relations, mounting inventory problems, and strategic missteps that left the company vulnerable to exactly the policy shifts that occurred in 2025. Filosa's $13 billion US investment plan represents damage control, not the integrated global strategy the merger promised.
Stellantis can survive as a single entity. The question is whether survival justifies the costs. If operating as one company means absorbing billions in tariff expenses, writing off tens of billions in misaligned EV investments, and managing fundamentally incompatible regulatory requirements across primary markets, the value proposition collapses.
Tavares saw it coming. The three-way balance between Italy, France, and the United States has broken. Daily management attention to unity can delay the fracture but probably can't prevent it.
The merger created the world's fourth-largest automaker. Four years later, it might have created the world's next breakup. The irony is perfect. Two weak companies merged to create strength. Policy changes they couldn't control turned that strength back into separate weaknesses wearing a single corporate name.
The split won't happen immediately. Disentangling operations, unwinding shared platforms, rebuilding independent capabilities, and navigating shareholder and regulatory approvals would take years. But the logic driving separation grows stronger while the case for unity weakens with every tariff announcement and regulatory divergence.
When the bloodstream slows to a dribble, the body starts thinking about amputation. Stellantis isn't there yet. But it's checking the tourniquet.
