Stellantis Dividend Risk Emerges as EV Plan Pullbacks Deepen Cash Flow Crisis

What happened

A recent Motley Fool article highlights dividend concerns for Stellantis investors, noting industry-wide EV plan pullbacks that have cost automakers heavily. DeepValue's report reveals Stellantis' industrial free cash flow swung from €12.9 billion in 2023 to negative €6.0 billion in 2024, driven by shipment declines and high electrification capex. Italian production hit a 68-year low in 2025, down 20% to 379,706 units, with structural price cuts on Fiat and Abarth EVs signaling persistent margin pressure in Europe. The company's $13 billion U.S. reinvestment and multi-energy pivot aim to recover North America profits, but execution risks are amplified by a CEO transition and European overcapacity. This combination of cash burn and strategic uncertainty challenges the market's assumption of a clean turnaround by 2026, reinforcing a cautious investment stance.

Implication

The dividend concerns reflect deeper financial instability, with negative industrial free cash flow limiting Stellantis' ability to fund shareholder returns without operational improvements. European operations continue to underperform, with plant underutilization and EV discounting likely to compress margins further, increasing the probability of the bear case scenario. North America's recovery is critical, but the $13 billion capex must deliver measurable market share gains and margin expansion to offset European drags. Key near-term catalysts include H2 2025 results and the 2026 Capital Markets Day, which should clarify cash flow trends and electrification targets. Given the 'WAIT' rating and low valuation multiples, patience is essential to avoid value trap risks while monitoring for signs of a credible turnaround.

Thesis delta

The news on dividend risks and EV plan pullbacks does not shift the core thesis but underscores the urgency for cash flow recovery. It reinforces the DeepValue report's view that Stellantis must demonstrate improved industrial free cash flow by 2026 to sustain dividends and avoid deeper valuation discounts. Therefore, the 'WAIT' rating remains justified, with heightened focus on dividend sustainability as a key monitor alongside margin trends.