IN the high-stakes world of global manufacturing, careers can be built and destroyed in the blink of an eye.
This is the story of Carlos Tavares - a man who transformed an ailing carmaker, challenged conventions, and ultimately became a casualty of the greatest technological shift in automotive history while keeping true to a proven, successful strategy.
To understand Tavares, we must go back to his roots.
A Portuguese-born engineer who cut his teeth at Renault-Nissan, he was never a conventional executive. From the beginning, he was a maverick - someone who saw possibilities where others saw obstacles.
Colleagues said he was different. While others talked about problems, he was already designing solutions. He had this uncanny ability to see through the corporate noise.
In 2014, the PSA Group was a carmaker on life support. Bleeding €3.6 billion in losses, the company was weeks away from complete collapse.
Enter Carlos Tavares. His transformation of the French carmaker was nothing short of miraculous. Within three years, he reduced the workforce by 15 per cent, closed underperforming plants, introduced radical cost-cutting measures, and turned a €3.6 billion loss into a €2.2 billion profit.
Tavares didn't just save PSA; industry watchers said he rewrote the rulebook of corporate survival. He was part accountant, part surgeon and part visionary.
While at the helm of PSA, he acquired General Motors Europe's brands and assets when the American carmaker left the European market and put Opel and Vauxhall up for sale.
This purchase seemed like a real coup because the two companies were offering the same products as Peugeot and Citroen. This allowed them to spread development expenditure over a larger footprint, resulting in highly competitive cars that won multiple prizes and awards in Europe.
Why abandon a perfectly successful strategy?
So in 2021, he engineered the Stellantis merger, his masterpiece. On the surface, combining brands with few things in common like Jeep and Fiat, Chrysler and Alfa Romeo, Ram and Vauxhall did not seem like an obvious choice.
However, the key shareholders of all the companies agreed because of Tavares's track record of turning around ailing operations. It was a bold move that cemented his reputation as an industry titan.
This wasn't just a merger. It was a strategic masterstroke that promised to reshape the global automotive landscape. Who can blame Carlos Tavares for continuing with a successful strategy of cost-cutting, eking out more efficiency, and improving margins?
If it worked for the last eight years, why wouldn't it work now? Just two years ago, Tavares was still seen as one of the best automotive executives in the industry, and all that success and profit were actually hiding something significant.
Something huge happened in the intervening years, and the pandemic also played a role in confusing the market.
A massive earthquake occurred in 2017, and the landscape of the automotive industry began changing as the tsunami spread out from two epicenters: China and Tesla.
In 2017, Tesla launched the Model 3 and gave the world a taste of affordable cutting-edge electric cars. The world was suddenly abuzz with talks of billions to be spent developing EVs.
It's true that the Model 3 still didn't bring Tesla consistent profitability, so while the hype was overwhelming, it was understandable that other carmakers were cautious about going into EVs.
But three years later, the Austin carmaker launched their world-conquering Model Y. Thanks to world-beating costs and efficiencies of Giga Shanghai, Tesla began recording very impressive margins, and suddenly the transition to electric became more real to other carmakers.
Elon Musk even told the world that the Model Y would be the world's best-selling car in 2023 once they could ramp up production. That sealed the deal: EVs are definitely here to stay, according to some industry experts and observers.
Tesla's fantastic rise also awakened the Chinese automotive industry from its doldrums.
Suddenly, they were no longer seen as copiers of Western designs but became a force of their own.
With every passing month, the China market is setting new sales records for New Energy Vehicles, which now stand at 53 per cent of total light vehicle sales in the world's largest automotive market.
With nearly 100 domestic EV brands competing, global carmakers like PSA, Volkswagen, and premium brands like Audi, BMW and Mercedes-Benz suddenly found themselves unable to compete, not just on price but also on technology.
Excited at the prospect of a global transition, Volkswagen's boss Herbert Diess, another visionary, made the mistake of being early with electric cars and was rewarded for his risk-taking with a thank-you-and-goodbye note.
The news cycle vaguely linked Diess's departure with the failure of Cariad, the new company set up by VW to spearhead software design.
Diess had correctly identified that software-defined vehicles would be crucial for the company's future and spent generously in that direction.
Yes, Cariad did fail, miserably. Their buggy software caused delays in the launch of the most important car for the transition, the ID3, so named in reference to the original Beetle and the Golf as the two cars that had defined the company's image and success.
Meanwhile, Tavares was happily chipping away at costs, ensuring this well-oiled Stellantis machine kept cranking out profits.
As he did that, Tavares didn't keep his eye on the EV transformation and now finds himself struggling to conquer electrification while fighting battles with trade unions and dealers and trying to address shrinking sales.
It was too much even for this visionary. Or is it actually the board just getting jittery?
While other big names were swimming in red ink - to some extent due to expensive R&D for EVs and negative margins on their first-generation electric products - PSA was actually awash with black ink.
Tavares's strategy still generated 14.344 billion Euros in profit for 2023, and there was no real worry that anything would change in 2024.
Change it did. A perfect storm began brewing: Headquarters continually pushed prices up for their American brands to improve margins, with Jeep models that used to sell for US$35,000 just a few years ago now bearing a US$55,000 sticker.
Few buyers were interested, and dealers began to see their stock piling up as sales slowed for the last two years. Since headquarters was reporting fat margins, they were disinclined to listen to dealers.
Even offers of better margins for dealers were not enough to appease them. Viral videos of 'unreasonably high prices' began surfacing.
As cars began piling up in storage yards, factories had to slow down, starting another battle front with the United Auto Workers.
The numbers were brutal: a 10 per cent global sales drop in the first half of 2024, with a 20 per cent plunge in the third quarter alone. The US saw a 17 per cent decline in sales, and Stellantis may burn through €10 billion in cash this year.
With two major stakeholders screaming blue murder, sales numbers dropping like lead balloons, and shrinking cash reserves, whispers of a leadership change began circulating a few months ago.
The board responded by saying they are always looking for a new CEO as part of their continuity process, which was followed up by another statement that they may decide not to extend Tavares's contract.
With his departure, the board's statement of "different views" was corporate diplomacy. Obviously, they have not seen eye to eye for months.
Sources say they blame Tavares for focusing on short-term profits and losing sight of the long-term prospects of the company.
Carlos Tavares represents a cautionary tale about the brutal nature of industrial transformation.
He wasn't a failure - he was a visionary who ultimately couldn't navigate the most significant technological shift in automotive history.In the automotive world, today's genius is tomorrow's cautionary tale. And Tavares just became the latest chapter in that unforgiving story.