Stellantis to move some EV production out of China

Shares of Stellantis (STLA) are trading lower Friday after the company announced a shift in its electric vehicle production strategy in response to new European Union tariffs. The tariffs, set to begin July 6, have prompted the automaker to move production out of China to combat costs.

Yahoo Finance's Seana Smith and Madison Mills break down the details.

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This post was written by Angel Smith

Video transcript

All right, let's take a look at Stata shares are falling this morning after the carmaker saying that it would ship production of some electric vehicles away from China due to New European Union tariffs.

Now the tariffs are scheduled to start just next month, July 6th and the result of an eu investigation into potential unfair subsidies for Chinese ev makers.

Now we're seeing Stata shares off nearly 5% here in early trading.

This is just the latest move.

I think when it comes to the movement here, moving some ev production out of China for investors and analysts, the questions that they're asking is, how quickly can that be done?

How realistic, what is that going to do to cost?

Is that something that will potentially hurt their margins down the line?

What is ST anis if anything, what can they do to maybe offset some of those increased costs if in fact, that is an issue.

So again, this is just a another uh potential uh problem or risk I guess associated with the stock coupled with the fact that that demand clearly not living up to those expectations and that overall has already been an overhang on ST and many of its competitors up until this point.

And that is exactly what the CEO talked about on their Investor Day.

Basically, this idea that you can only be so defensive with your balance sheet in terms of cost cutting.

At a certain point.

You got to start bringing in the money, the CEO saying that he to correct, correct quote arrogant mistakes.

He said they had a convergence of three big issues that he should have started an immediate task force to address.

And he said, quote, when I'm saying that you're arrogant, I'm talking about myself.

So really taking some accountability for the challenges that we've seen in the stock, not the worst year to date performance and certainly not the worst over the past year, in particular, they're down about 7% in Milan trading over the past year.

So it's certainly not been a horrific performance over there looking year to date here stateside, it is looking a little bit worse down 14% but certainly experiencing some of the broader headwinds that ev makers and carmakers in general have been experiencing here as well.