European markets closed higher on February 6, 2026, despite Stellantis recording its largest single-day decline after announcing €22.2 billion ($26.5 billion) in charges related to scaling back electric vehicle development. The STOXX 600 index rose 0.9% to close at 612.61 points, recovering from morning losses as gains in defense and banking stocks offset the automotive sector’s 3.4% decline.
Stellantis Reset Triggers Historic Selloff
Milan-listed Stellantis shares plummeted 24-25% after the Franco-Italian automaker disclosed preliminary net losses of €19-21 billion for the second half of 2025. The company suspended its 2026 dividend and announced plans to issue up to €5 billion in hybrid bonds to preserve balance sheet flexibility. CEO Antonio Filosa acknowledged the charges stemmed from “overestimating the pace” of the EV transition.
The writedown includes canceled battery-electric vehicle projects such as the Ram 1500 BEV and marks a strategic pivot toward extended-range electric vehicles (EREVs) that use gasoline engines to charge batteries while driving. Stellantis also divested its 49% stake in the NextStar Energy joint venture with LG Energy Solution for $100, with LG converting the Canadian battery plant to focus on energy storage systems rather than automotive cells.
The selloff triggered a trading halt and represented the automaker’s worst single-day performance on record, bringing shares to levels not seen since June 2020. Stellantis stock has declined over 13% since the beginning of 2026, following a 25% drop in 2025 and 40.5% decline in 2024.
Sector Divergence Defines Market Action
While automotive stocks led losses, defense contractor Kongsberg surged 15.6% on strong quarterly earnings and a $165 million order, lifting the European defense sector 1.6%. Norwegian telecom operator Telenor climbed 4.9% after beating fourth-quarter profit expectations.
Banking stocks rallied 1% as Societe Generale jumped 7.9% after raising its 2026 profitability target and exceeding fourth-quarter forecasts. Weight-loss drugmaker Novo Nordisk gained 5% following FDA action against copycat GLP-1 drugs.
Technology stocks declined 1%, heading toward their largest weekly drop since March 2025 as investors weighed competitive threats from emerging AI tools. Amazon’s announcement of a 50% increase in capital spending plans—reaching $200 billion primarily for data centers—contributed to tech sector weakness despite the company beating revenue forecasts.
EV Transition Economics Under Scrutiny
Stellantis’s charges follow similar writedowns at Ford ($19.5 billion) and GM ($7.1 billion), both related to EV strategy adjustments. The pattern signals growing recognition among legacy automakers that consumer adoption timelines for battery-electric vehicles have not met earlier projections, particularly in the mass-market and commercial segments.
According to Russ Mould, investment director at AJ Bell, Stellantis placed a “miscalculated bet” on electric vehicles, though broader questions about EV adoption persist around price competitiveness, charging infrastructure access, and battery longevity concerns. The company’s shift toward hybrid powertrains reflects market reality where regulatory mandates and consumer demand remain misaligned.
The ripple effects extended beyond Stellantis. French suppliers Valeo and Forvia declined 0.4% and 0.7% respectively, while Renault fell 3% on concerns about reduced volumes from a major customer. Battery manufacturers faced similar pressure as LG Energy Solution absorbed Stellantis’s NextStar stake and Samsung SDI reportedly repurposed three of four Indiana production lines for non-automotive applications.
Market Structure Implications
Societe Generale strategist Sophie Huynh noted that European markets are pricing a structural shift where AI creates opportunities for hardware manufacturers while challenging traditional software companies. This divergence differs from U.S. markets where mega-cap technology stocks dominate index movements, creating more varied sector performance in European benchmarks.
The market’s sector rotation reflects competing narratives: defense benefiting from sustained geopolitical tensions and military spending commitments, banking gaining from improved net interest margins and cost discipline, while automotive faces multi-year headwinds from stranded EV investments and compressed margins.
German industrial production data released Friday showed output fell more than expected in December, tempering hopes for manufacturing sector recovery. The weak data point highlights challenges facing Europe’s industrial base as it navigates energy costs, competitive pressure from Asian manufacturers, and transition costs for electrification mandates.
Looking Ahead
Stellantis management scheduled a conference call for later February 6 and will release full-year results on February 26, 2026, with an investor day planned for May 21. Analysts expect guidance updates on U.S. market recovery timing, hybrid vehicle rollout cadence, and terms for the €5 billion bond issuance.
UBS analysts characterized the market reaction as expected given the magnitude of charges and soft 2026 guidance, but noted that new management’s “decisive” cleanup and solid regional fundamentals could position the stock as a potential turnaround opportunity. Consensus analyst ratings stand at 3 Buy, 8 Hold, and 1 Sell with a Hold rating at €3.00 per share.
For broader European markets, the week’s performance demonstrated resilience despite company-specific shocks, with the STOXX 600 finishing the week up 1% as sector rotation offset individual disappointments. The pattern suggests European equities are increasingly trading on company fundamentals and sector-specific dynamics rather than moving in lockstep with macroeconomic headlines.
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