CEOs like Stellantis’s Filosa (centre) are going back to basics
Some £26 billion of spending has been cut as CEOs look to chop new models, plants and headcounts
The enormous number of CEO replacements at global car makers over the past year share a common thread: once installed, they have invariably started chopping.
Between them, this new crew – let’s call them Generation Axe – have written off investments worth more than £26 billion as they delete models, electric platforms, underachieving plants and swathes of workers, whether underperforming or not.
The size of the bets in EVs, in China and in software were such that when they crumbled in the face of Trump’s emissions reversals, customer apathy, Chinese rivals or sheer unworkability, the only solution was to replace the leadership, cancel the bad debt and start again.
A new CEO signifies a fresh start. It sells a new message to investors, invariably one involving cutting costs and returning to the basics of car making. Often it’s in the interests of the new boss to cut back dead wood, not only to free themselves of unprofitable projects tied to the previous CEO but also to compose a growth story for themselves. It’s easy to do that when initial writedowns plunge the company into the red.
It’s also a chance for the board to rewrite the incentive plan. CEOs usually make the bulk of their income from bonuses linked to short-and long-term targets. Getting those wrong puts your company on a dangerous course.
For example, 30% of the incentive payout for previous Stellantis CEO Carlos Tavares was linked to the ‘projected number of EV nameplates at the end of a three-year period’. This was almost certainly why Stellantis gave more weight to EVs, especially in the US. New CEO Antonio Filosa’s pivot back to ICE formed the bulk of last year’s £19bn in write downs.
Incentives are incredibly motivating; Tavares took home €23.1 million in 2024. But they must steer the company in the right direction. Filosa’s long-term incentives are equally generous, up to 1040% of his $1.8m base salary. The EV nameplate goal has gone, replaced by one linked to quality improvements.
Getting the right CEO and setting them on the right path is incredibly difficult when today’s forecasting might as well be done by a soothsayer. But returning to the basics of car making, as Generation Axe have told investors they plan to do, will at least provide the reset the industry needs to cope with whatever comes next.
