Stellantis (STLA.US) achieved a 12% increase in shipments in the first quarter, with North American recovery and collaboration in China driving the transformation forward.

Stellantis (STLA.US) is now at a crucial turning point. The announcement released on Wednesday showed that global shipments in the first quarter of this year increased by 12% compared to the same period last year, mainly due to the significant increase in delivery volumes of newly refreshed models under the Jeep and Ram brands in the North American market. With the recovery of performance, the logic of Stellantis' revival is becoming clearer: on one hand, through massive write-downs and reduction of electric vehicle expenses to achieve financial "slimming down"; on the other hand, they are actively engaged in deep negotiations with Chinese car companies (Dongfeng, Leapmotor, etc.) in an attempt to revitalize redundant assets in Europe through technology and production capacity cooperation. Q1 performance rebound: North American market as growth engine The company announced on Wednesday that direct shipments to North American dealers, distributors, retail and fleet customers in the first quarter reached 379,000 vehicles, a 17% increase year-on-year. The group achieved growth in all regional markets around the world (including Europe), providing the latest evidence for the business recovery after strategic adjustments. Boosted by this news, Stellantis' Milan stock price rose by 4.6% in early trading on Wednesday. However, the stock has already fallen by about a quarter this year, making it the worst-performing stock in the European Stoxx 600 Automobiles and Parts Index. The stock continued its rebound in the US market, rising by 3.06% as of the time of writing. Strategic shift: Write-down of $26 billion, shifting from "blind electrification" to "pragmatic hybridization" Previously, the group adjusted its electric vehicle plans and adopted a pricing strategy to regain market share. After a significant decline in market share during former CEO Carlos Tavares' tenure, Stellantis is now accelerating the launch of more hybrid vehicle models to win back consumers. Since current CEO Antonio Farlisa took office, the company has taken extremely decisive actions to "deflate". In terms of financial write-downs, the company had previously made write-downs and charges of over 22 billion euros (approximately $26 billion). Farlisa admitted that this reflected the company's previous "overestimation of the pace of energy transition". In terms of project streamlining, the group decisively canceled the plan for an all-electric version of the Ram 1500, and terminated the battery super factory projects in Italy and Germany. In terms of product return, they are refocusing on strong market demand for fuel vehicles and hybrid electric vehicles (HEV/PHEV). Data from Italian unions show that the demand for the Fiat 500 hybrid version and the new Jeep Compass model has led to a rebound in local production. Revitalizing production capacity: Intending to collaborate with Dongfeng, Leapmotor, using the "China solution" for self-help While reducing costs, Stellantis is trying to solve the chronic problem of excess production capacity in Europe by introducing Chinese partners. Considering deep cooperation with Dongfeng Motors According to sources familiar with the matter, Stellantis is discussing joint production with Dongfeng Motors in Europe and China. The plan includes allowing Dongfeng to use Stellantis' idle factories in Europe, while Dongfeng may also produce specific brand models for Stellantis in China. There are even reports that Dongfeng may directly acquire or invest in one or more European factories in the future. Deepening collaboration with LEAPMOTOR Apart from known sales collaborations, Stellantis is planning to jointly develop an electric SUV under the Opel brand with Leapmotor, utilizing Leapmotor's technology for production at a factory in Spain, significantly reducing research and development costs and cycles. Extensive contact with Chinese technology giants It is reported that senior executives of Stellantis have also met with companies such as Xiaomi and Xiaopeng to explore various restructuring and technology cooperation possibilities. This "Chinese technology + European factory" model can help Stellantis reduce costs, and help Chinese car companies bypass EU tariffs. Comprehensive assessment: Faces "major exam" on May 21 Currently, Chairman John Elkann and CEO Farlisa of the group have hired McKinsey & Co. to assist in a comprehensive assessment of the business. The cost of recovery is still ongoing. Last week, the group announced the layoff of about 40% of engineering positions (650 people) at its Lelsheim base in Germany, and plans to transition the center to focus on advanced autonomous driving and software development. Analysts believe that Stellantis is further reducing the importance of Germany in its strategy, prioritizing resources towards North America and emerging technology cooperation. All strategic details will be officially announced on "Capital Markets Day" on May 21. At that time, whether this traditional car manufacturer can completely emerge from the quagmire through reform will be the focus of the global automotive industry.