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Stellantis’ (NYSE:STLA) EV Plan Shakeup Sends Shares Plummeting
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Stellantis’ (NYSE:STLA) EV Plan Shakeup Sends Shares Plummeting

Story Highlights

Stellantis shares slide as the company looks to move production to save on upcoming tariffs.

The electric vehicle market is not what it once was. It’s certainly nowhere near as brisk, and all over the spectrum, electric vehicle makers—whether a recent startup or expanding legacy—are retooling their strategies accordingly. Stellantis (NYSE:STLA) is no different, but its plan cost it just over 4% of its market cap as shares plunged in Friday afternoon’s trading.

So, what did Stellantis do that so frightened shareholders that they bailed out in large numbers? It’s shaking up its production plans. While previously, much of its production work was done in China, it’s moving quite a bit of it to the European Union (EU) in a bid to avoid paying new tariffs on Chinese-made electric vehicles.

The result has left investors wondering just how much will be saved and just how much it will cost to realize those savings. Uncertainty around those points right now has likely left investors concerned and pulling back accordingly.

Stellantis Is Working Toward the Development of SDVs

Meanwhile, Stellantis is working toward the development of SDVs, or software-defined vehicles. SDVs have long represented significant market potential, offering a range of new services to drivers. New services, in turn, can mean potential recurring revenue if sold via subscriptions or at least new inducements to buy one brand over another if included as options.

However, Stellantis—along with others—has found that the move to SDV isn’t always simple. But it’s still working in that direction, as it recently showed off its new focus on ABC, or Autodrive, Brain, and Cockpit architecture. The result is helping Stellantis produce new kinds of vehicles for less, thanks to a decreased need for semiconductors involved in construction.

Is Stellantis a Good Stock to Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on STLA stock based on 12 Buys, four Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 25.9% rally in its share price over the past year, the average STLA price target of $29.12 per share implies 44.12% upside potential.

Disclosure

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