Carlos Tavares is known as one of the most outspoken leaders in the car industry. Among the executive class, the former Stellantis chief executive is also considered to be one of the best drivers of its products on the track.
He used a similarly hard-driving style in the board room, constantly pushing his managers and factories to deliver bigger profits. Yet after his enforced departure from the global carmaker, it appears Tavares may have been better off applying the brakes than charging ahead.
Stellantis announced Tavares’s resignation with immediate effect on Sunday. In a statement, Henri de Castries, Stellantis’s senior independent director, made it clear that “different views” were behind his departure. In a sign of the discord, there was no statement from Tavares. Shares fell more than 6% on Monday.
The global car industry has been struggling this year with falling demand in its key markets, at the same time as it spends heavily to switch to electric vehicles – all the while fending off increasing competition from China.
For Stellantis, owner of brands ranging from Fiat and Chrysler to Peugeot, Opel and Jeep, the pressures became clear in September when it shocked investors with a profit warning. A buildup of unsold cars in North America – priced too high, according to analysts – plus delays to European car launches were major factors in the company saying it would burn through between €5bn (£4.2bn) and €10bn this year.
Tavares was against issuing such a stark warning, according to a person with knowledge of internal discussions, arguing instead that Stellantis could make steep cost cuts and actually generate cash during the year. Yet the board is said to have felt that making cuts now would have stored up problems for next year and beyond.
Tavares’s ruthless approach, which the Stellantis board was said to have rejected, was honed under another Carlos: Carlos Ghosn, the former head of the Nissan-Renault alliance, who was known as “le cost killer”. Tavares shared many of the same instincts and was promoted rapidly through Renault.
However, the protege turned rival when Tavares said in a 2013 interview that he wanted to lead a global carmaker. Tavares achieved that goal less than a year later when he left Renault for French-dominated rival Peugeot, which also owned Citroën, Opel and Vauxhall. His successful turnaround of the group made him one of the most prominent voices in the global car industry.
Yet his ambitions did not stop there. When the Agnelli industrial dynasty and its Fiat Chrysler group came calling, Tavares led the 2019 merger talks and was appointed to lead one of the world’s largest carmakers. It allied one of Detroit’s big three carmakers with one of Europe’s biggest.
One of the most striking things about Tavares’s fall was its speed: less than a year ago it reported record net profits of €11.8bn. Yet it quickly became clear the profits were unsustainable and, in September, Tavares said he would retire in 2026. Analysts led by Daniel Roeska at Bernstein, an equity research house, said the decline in North America undermined Tavares’s credibility, while 30% of investors had already in April balked at a pay package worth nearly €37m that was considered by some as a warning sign.
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Tavares’s legacy will be divisive – not least in the UK where one of his last acts was announcing the closure of a Vauxhall van factory at Luton, putting 1,100 workers at risk of redundancy or relocation. However, several people said there was little chance of Stellantis making a U-turn on that decision, even with Tavares’s departure, because the company still has too much spare van-making capacity in Europe.
In the US, some executives, hard-pressed suppliers and workers will also be breathing a sigh of relief. The United Auto Workers claimed a victory on his departure, and will look forward to a more conciliatory approach. The union’s president, Shawn Fain, said in a statement: “Tavares is leaving behind a mess of painful layoffs and overpriced vehicles sitting on dealership lots.”
One person who has worked with him said that he is a “visionary” who deserves credit for turning around Peugeot and building Stellantis into a global player. However, another said that, despite his undoubted intelligence, the seeds of his downfall were sown in the merger that created Stellantis, an unwieldy beast with 14 separate brands and cultures that have not been fully integrated.
Instead, John Elkann, the scion of the Agnelli interests who chairs the Stellantis board, will chair an interim executive committee. The board room bust-up leaves 66-year-old Tavares unable to add another corporate turnaround to his record.