Stellantis, the proud parent of Chrysler, Jeep, and Ram, just woke up to a 13% drop in its stock price this morning. (Must be fun checking your portfolio after that.) 

Why? Well, it turns out burning through billions of dollars isn't great for business. They’ve cut back on their annual forecasts, and surprise, surprise—it’s their EV division that’s running up the tab. Apparently, switching to electric is a bit more expensive than they thought. (Who could’ve guessed?)

But Stellantis isn’t alone in this bloodbath. Mercedes, and Volkswagen have all revised their annual forecasts recently, as the entire European auto industry seems to be grappling with declining sales. Even Aston Martin, the car that Bond drives (but apparently, no one else does), is in the dumps.

Let’s be real: transitioning to electric vehicles isn’t cheap. Stellantis now expects to torch between $5.58 billion and $11.17 billion in cash this year. Instead of generating the positive cash flow they once dreamed of, they're watching it vanish into the black hole that is their EV division. (Guess those batteries aren’t the only things running on empty.)

As much as Stellantis would love to blame everything on their EV division, the issues run deeper. In the U.S., they’re grappling with rising costs to overhaul operations, all while sales are moving at a painfully slow pace. And to top it off, they’ve decided to slash North American shipments by 200,000 units in the second half of the year—double what they initially planned. Why? Because their dealer lots are overflowing with unsold inventory. (Ever tried to sell last year's model when the new one’s already out? Yeah, good luck with that.)

Stellantis is rolling out bigger discounts on 2024 and older models to move all that stock. Sure, it’s great if you’re shopping for a deal, but not so much for Stellantis’ bottom line. They’ve now lowered their operating profit margin forecast to between 5.5% and 7.0%, which—if you’re keeping score—is significantly down from their previous projections. (To put that in perspective, Tesla, despite its own challenges, still manages to keep its margins comfortably above 9% in most quarters.)

But like I said, it’s not just Stellantis having a bad time. BMW, Mercedes, and Volkswagen are all facing their own struggles, and European carmakers as a whole are dealing with roughly two million fewer cars being sold annually compared to pre-pandemic levels. To make matters worse, Chinese automakers like BYD and Xpeng are stealing market share like it’s candy on Halloween. And now they're starting to enter the U.S. market. Stellantis is feeling the heat from both sides, with no easy way out of the pressure. 

Meanwhile, back in the U.S., Stellantis has another problem on its hands: labor unrest. The United Auto Workers (UAW) union is not happy and is threatening to strike, accusing the automaker of broken promises. (Sounds like a fun office meeting.) And as if that weren’t enough, they’ve had to recall more than 1.2 million Ram 1500 trucks due to a software glitch in the anti-lock brake system. (Because, of course, that’s the last thing you want to malfunction in a truck that weighs more than your house.)

CEO Carlos Tavares is under some serious pressure. His contract runs through 2026, but there’s already talk about whether he's the right person to steer the company through this mess. Stellantis says they're evaluating leadership options. Translation? Tavares might want to freshen up his resume. (Just in case.)

Stellantis stock is currently down 30% year to date, and by market close, I wouldn’t be surprised to see a 4 as the first number.

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Stock.News has positions in Tesla.