Stellantis' Strategic Shift from EVs to ICE: Implications for Investors

Stellantis' abrupt pivot from electric vehicles (EVs) to internal combustion engines (ICE) has sparked intense debate among investors and industry analysts. Once committed to a 100% EV transition by 2030, the automaker has now scrapped this target, prioritizing ICE platforms in North America—a market where its share has declined for eight consecutive yearsStellantis. 1.5 and 2.2 diesel engines extended until 2030^[1]. This recalibration reflects a pragmatic response to waning consumer demand for EVs, supply chain bottlenecks, and the economic realities of a slowing green transition. For investors, the shift raises critical questions: Can Stellantis regain profitability by doubling down on ICE? Or does this strategy risk alienating stakeholders in an increasingly climate-conscious market?

A Financial Reckoning: 2024's Stumbles and the ICE Comeback

Stellantis' 2024 financial results underscore the urgency of its pivot. Revenue plummeted 17% to €156.9 billion, while net profit collapsed by 70% to €5.5 billion, with adjusted operating income (AOI) falling 64% to €8.6 billionFull Year 2024 Results - Stellantis^[3]. Executives attributed these declines to inventory reductions, gaps in product offerings, and the high costs of transitioning to EVs. The company's decision to extend production of 1.5L and 2.2L diesel engines until 2030—initially slated for phaseout—signals a return to tried-and-true technologies that underpin its commercial vehicle segmentFull Year 2024 Results - Stellantis^[3].

The Ram 1500 Hemi's revival, for instance, has already generated buzz, with analysts noting its potential to bolster margins in a segment where ICE vehicles dominateStellantis. 1.5 and 2.2 diesel engines extended until 2030^[1]. Similarly, Dodge's price cut for the 2026 Charger EV—a move to stimulate demand—highlights the automaker's balancing act: retaining EV footholds while prioritizing ICE profitabilityStellantis. 1.5 and 2.2 diesel engines extended until 2030^[1].

Market Share Gambit: Can ICE Win Back North America?

North America remains Stellantis' most critical battleground. Since 2018, the company has lost ground to rivals like Ford and Tesla, with executives admitting to “many mistakes” in neglecting the U.S. marketAfter Years Of Decline, Stellantis Execs Admit...^[2]. To reverse this trend, Stellantis has restructured its marketing operations under Lucy McLellan, a seasoned Jeep executive tasked with fostering cross-brand collaborationStellantis names Lucy McLellan SVP of new North America...^[4]. This reorganization aims to streamline efforts across Jeep, Ram, and Dodge, targeting consumers who remain loyal to ICE's performance and reliability.

However, the pivot is not without risks. While ICE vehicles currently account for over 70% of North American sales, regulatory pressures and EV subsidies could erode margins in the long termThese are the top five energy technology trends of 2025^[5]. Stellantis' extended diesel engine production—a cornerstone of its ICE strategy—also faces scrutiny in markets prioritizing zero-emission goals.

Investor Sentiment: Optimism Amid Uncertainty

Investor reactions have been mixed. A 9% share price surge in early 2025 followed CEO Carlos Tavares' pledge to prioritize profitability over aggressive EV targetsAfter Years Of Decline, Stellantis Execs Admit...^[2]. Yet, critics argue that the pivot underlines Stellantis' struggle to adapt to a rapidly evolving industry. As one analyst noted, “The company is playing catch-up in both EV and ICE segments, which could leave it vulnerable to disruptive competitors”These are the top five energy technology trends of 2025^[5].

The automaker's proposed dividend of €0.68 per share and plans to hire a new CEO signal confidence in its recovery. However, with EV adoption rates in North America stagnating at 12% in 2025Stellantis names Lucy McLellan SVP of new North America...^[4], the window for ICE dominance may narrow faster than anticipated.

Broader Industry Trends: A Pivotal Year for Energy Transitions

Stellantis' strategy must be viewed through the lens of broader macroeconomic forces. The U.S.-China trade war has disrupted EV supply chains, while global clean energy investments hit $2.2 trillion in 2025, favoring renewables and grid infrastructure over automotive electrificationStellantis names Lucy McLellan SVP of new North America...^[4]. These dynamics have emboldened automakers to hedge their bets, with Stellantis' ICE pivot mirroring similar moves by Ford and GM to retain market share in ICE-dependent regions.

Yet, the long-term viability of this approach remains uncertain. Regulatory tailwinds, such as California's 2035 EV mandate, and consumer shifts toward sustainability could force Stellantis to revisit its strategy by 2030These are the top five energy technology trends of 2025^[5].

Conclusion: A Calculated Bet with High Stakes

Stellantis' pivot to ICE is a calculated gamble to stabilize profitability and market share in the short term. While the strategy aligns with current consumer preferences and fiscal realities, it risks alienating investors seeking long-term climate resilience. For now, the automaker's success hinges on its ability to execute cost-effective ICE innovations while maintaining a foothold in the EV space. Investors should monitor two key metrics: the pace of North American market share recovery and the regulatory landscape's evolution by 2030. In a sector defined by rapid disruption, Stellantis' agility—rather than its allegiance to ICE—will ultimately determine its fate.