Stellantis Lost $26 Billion, Now It’s Betting on Jeeps and V-8s

Stellantis posted a full-year net loss of $26.2 billion (including a $23.8 billion second-half loss), with North America losses of $2.2 billion (of which $1.4 billion related to tariffs), leading to suspension of U.S. profit sharing and no dividend. CEO Antonio Filosa says the company will return to profitability in 2026 as order books in North America are up 150% and product moves ramp — notably the Jeep Cherokee restart and plans to build an additional 100,000 Ram 1500 trucks with Hemi V-8s to fill ~50,000 orders — even as Stellantis takes roughly $26 billion of charges largely tied to cancelled EV programs (including the Ram 1500 BEV and Jeep Wrangler 4xe) and sells its 49% stake in the Windsor battery joint venture to LG.

Analysis

Market structure: Stellantis’ $26.2B 2025 loss and $26B EV write-downs shift near-term winners to ICE-related value chains (Ram trucks, V‑8 suppliers, dealers) and to LG Energy Solution (buying STLA’s NextStar stake). Immediate demand signals: North America orderbook +150% YoY, 50k Hemis backlog and +100k Hemis planned supply imply stronger pricing/leasing economics for full‑size trucks in H1 2026; EV supply chain players and battery capacity are the principal losers until demand visibility returns.

Risk assessment: Tail risks include regulatory reversal (federal emissions or tariff changes) that would increase compliance costs, large supplier litigation/claims from cancelled programs, and covenant stress if cash flow fails to improve. Near term (days–weeks) expect credit spread widening and higher equity implied vol; short term (weeks–months) watch March dealer deliveries and conversion rates; long term (quarters) the firm’s pivot away from EVs risks market-share erosion if EV demand accelerates again.

Trade implications: Direct plays: short-biased exposure to STLA equity and corporate credit into Q1 delivery cadence, with simultaneous long exposure to GM (ticker GM) or Ford (F) as relative hedges given smaller one‑time hits. Options: purchase 3–6 month STLA put spreads to cap premium; consider long call spreads on F/GM into model refresh catalysts. Cross-asset: overweight oil/energy (XOM/CVX or XLE) by +1–2% as higher ICE utilization supports fuel demand over 3–12 months.

Contrarian angle: The market may be over-penalizing one‑time charges—if STLA converts 30–50% of the enhanced orderbook by end‑Q2 2026, EPS swing could be large. Historical parallel: post‑restructuring auto rebounds (GM post‑2009) show sharp recoveries once cash charges clear. Action trigger: accumulate STLA equity only after shares fall another 30–40% or credit spreads >250–300bps, or upon verified sequential improvement in monthly dealer receipts.

Key Decisions for Investors

• Establish a tactical short position in STLA equity sized 1–2% of portfolio immediately, hedge with a protective buy of a 3‑month put spread (sell 1 strike, buy 2 strikes lower) to limit downside while capturing elevated IV; reassess after March dealer delivery numbers.
• Enter a relative‑value pair: long GM (1–2% weight) and short STLA (2–3% weight) to capture probable faster normalization at GM given smaller EV write-downs and more stable North American profit pools; hold 3–9 months and tighten stops at 15% adverse move.
• Allocate +1–2% overweight to integrated oil majors (XOM or CVX) for 3–12 months to capture incremental fuel demand from renewed ICE focus and Hemis volume; trim if Brent falls >15% or auto miles driven data weakens.
• Avoid long positions in battery-capacity reliant suppliers exposed to NextStar counterparty risk for 6–12 months; consider selectively adding LG Energy Solution exposure where accessible (direct or ETF) to capture upside from acquiring STLA stake.
• Only consider buying STLA equity as a contrarian value play if shares decline another 30–40% or if STLA’s 2H‑2026 consensus adjusted EBIT/EV multiple falls below 4x, otherwise use options to express directional view.