Stellantis: From Turbulence to Turnaround—Can Filosa's Strategy Spark a Valuation Re-Rating?

The automotive sector is in a state of flux, with legacy manufacturers racing to adapt to electric vehicles (EVs) and shifting consumer preferences. Stellantis, the world's fourth-largest automaker, has been no exception to these pressures. Under CEO Antonio Filosa's leadership since early 2023, the company has embarked on a sweeping operational overhaul to stabilize its finances, improve efficiency, and position itself as a credible EV competitor. The question now is: Can these efforts translate into a sustained turnaround and a re-rating of its undervalued stock?

Operational Turnaround: Precision in Chaos

Filosa's first order of business was to tackle the root causes of Stellantis' struggles: bloated inventories, warranty costs, and sluggish decision-making. By centralizing global quality control, he slashed U.S. dealer inventories from 500,000 to 300,000 units within nine months—a move that reduced liquidity strain and improved customer satisfaction.

Simultaneously, Filosa decentralized decision-making to regional teams, empowering them to respond faster to market shifts. This strategy bore fruit in regions like South America, where localized production hubs—such as the Pernambuco facility—drove a 19% shipment growth in 2024 despite currency volatility. In North America, the shift of Jeep Grand Cherokee production to the U.S. avoided European tariffs, saving $2.5 billion annually. Such moves highlight a disciplined approach to supply chain optimization, a critical step toward profitability.

Electrification: Betting on Scale and Software

The EV race is not just about vehicles—it's about software and ecosystems. Stellantis' STLA platform, designed to cut development costs by 20% by 2026, underpins flagship models like the Jeep Wagoneer Electric and the budget-friendly Recon (priced under $25,000). The company's goal—50% of U.S. sales and 100% of European sales to be fully electric by 2030—is ambitious but achievable, given its brand portfolio and manufacturing scale.

Software integration is another battleground. Under CTO Ned Curic, Stellantis has consolidated its software teams and partnered with Mistral AI to develop in-car assistants. The STLA AutoDrive autonomous system aims to rival Tesla's Full Self-Driving, positioning software as a future revenue stream. While competitors like BYD and Tesla dominate headlines, Stellantis' incremental progress in tech and production efficiency suggests it is not yet out of the game.

Financials: A Fragile Foundation

Despite operational strides, Stellantis' financials remain a concern. Q1 2025 revenues fell 14% to €35.8 billion, with shipments down 9% due to pricing wars and supply chain hiccups. The 2024 cash burn of €6.8 billion underscores the risks of aggressive EV investments amid macroeconomic uncertainty.

However, there are glimmers of hope. European market share rose to 17.3%, and U.S. retail orders surged 82% in March 2025, suggesting strong demand for redesigned models. Filosa's focus on margin stabilization (targeting 15–20% pre-pandemic levels) and localized production could yet turn the tide.

Valuation: A Discounted Bargain or a Risky Bet?

Stellantis trades at a significant discount to peers like Tesla (TSLA) and BYD (002594.SZ), with a price-to-sales (P/S) ratio of 0.4x versus Tesla's 3.2x. This gap reflects skepticism about execution risks, including lingering tariff disputes and Maserati's underperformance. Yet, with a 2026 analyst price target of €12.50 (vs. its current €8.20), the stock offers a potential 52% upside if operational improvements materialize.

Investment Case: The Calculated Gamble

The bullish case hinges on three factors:
1. Execution: Can Stellantis deliver on its EV pipeline without further cash burn?
2. Market Share: Will its brand strength (Jeep, Ram) and localized production offset competition from Asian rivals?
3. Valuation Re-Rating: Will Wall Street reward progress in quality metrics, margins, and EV adoption?

While risks like tariff wars and Maserati's restructuring loom large, Filosa's track record—reducing inventory, improving regional agility, and stabilizing core brands—suggests a turning point. The suspension of 2025 financial guidance is a red flag, but the 82% U.S. order surge and European market share gains signal latent demand.

Conclusion: A Buy with Eyes Wide Open

Stellantis is a classic turnaround story: high risk, high reward. Its stock is undervalued relative to peers, and Filosa's operational rigor has laid groundwork for a recovery. Investors should buy on dips, targeting the €12.50 price objective, but remain vigilant about execution and macroeconomic headwinds. For the bold, this could be the moment to bet on a legacy automaker's reinvention.

Rating: Buy
Target Price (2026E): €12.50
Risks: Tariff disputes, EV competition, Maserati underperformance