Reuters: Tavares wanted to cut even deeper, destabilizing Stellantis further

According to a recent Reuters report, Carlos Tavares was dismissed by the Board of Stellantis because his targets were too “radical” and board members were concerned they would destroy the company. One of these targets was nearly doubling the company’s EV share in Europe from 12% to 21% of sales to avoid fines, which he would have done by reducing gasoline-car sales; but mainly the friction was around cost-cutting measures.

Earlier, the Board reportedly was upset by Tavares’ public blaming and shaming of North American leadership. Tavares went so far as to fire the head of North American operations, replacing him with the head of the South America region—an Italian who reportedly considers himself to be Brazilian in spirit. He also publicly blamed suppliers for high costs, and wanted to drop long-time suppliers if they didn’t cut costs enough.

According to Reuters, Tavares, like Sergio Marchionne, had a strictly top-down leadership style, suggesting that he was well aware of the many warning signs that came before profits started to slump. Stellantis North America was possibly the last company to realize that, with shortages in the past, premium post-COVID pricing could not be sustained. When the company finally and belatedly took action, inventories had swollen to high levels, and massive discounts, changing every day, confused many customers.

Tavares’ massive cost-cutting, coupled with premium pricing, gave him a 36.5-million-euro paycheck last year, based on 2023 profits. One or more board members told Reuters, too, that he planned to draw profits from 2025 to 2024. The strategy was guaranteed to have lasting consequences.

Tavares, according to Reuters, clashed not only with dealers, unions, suppliers, and governments, but also with board members, the one group which could fire him.