Background: Stellantis is the global car giant formed in 2021 after the merger of Fiat Chrysler and PSA Group. It owns 14 car brands across the world, including Jeep, Chrysler, Peugeot, Ram and Dodge. Basically, if it’s got four wheels and a tough-sounding ad voiceover, Stellantis probably owns it.

What happened: Stellantis has just announced a massive US$26 billion write-down. Back in 2021, the company went all-in on electric vehicles, rolling out electrification slogans across all 14 brands:

• Jeep promised "Zero Emission Freedom"
• Dodge went with "Tear up the streets, not the planet."

But management has now admitted it overestimated how fast the energy transition would happen. The result is billions in write-offs and cash costs from cancelled EV programs, plus the expense of shrinking its EV supply chain.

What else: The company is now hitting the reset button. Stellantis is pivoting back toward hybrid and traditional combustion engines. Investors weren’t impressed. The share price fell 30%, wiping billions off the company’s market value and signalling how badly the market viewed the EV misstep.

What's the key learning?

💡Businesses that over-invest based on regulatory momentum risk getting caught if and when politics changes. Many automakers ramped up EV spending when the Biden administration introduced tough emissions rules and ambitious EV targets.

💡But when Trump was elected, the political support shifted and regulations were rolled back. Throw on top of that, consumer demand for EVs failed to scale as quickly as expected. That left carmakers stuck with expensive assets built for a future that arrived more slowly than planned.

💡Capital-intensive industries, like car makers have it tough because they need to plan manufacturing and supply chains a decade ahead, even though policy and consumer sentiment can flip fast. Stellantis isn’t alone here. Ford has taken a US$19.5 billion EV write-down, and GM has absorbed a US$6 billion hit, with many now pivoting back to hybrids and combustion engines.