Wolfe Research lowered its rating on Stellantis (NYSE:STLA) to Underperform on Wednesday, highlighting significant risks to the company’s earnings and free cash flow due to ongoing structural challenges and unfavorable macroeconomic conditions.
In its updated Autos Playbook for the latter half of 2025, Wolfe analysts stated, “We downgrade STLA to UP from PP with EUR 6 price target, as we see considerable downside risk to earnings and FCF estimates amid deep structural issues.”
The report pointed out that while the U.S. administration eased some tariffs after initially imposing a 25% tariff on imported vehicles and many non-USMCA parts, the relief has been uneven. “Supplier stocks, all of whom appear to be passing along tariff costs, have largely recovered,” the note explained, but “GM & STLA (that have a higher net tariff burden) still lagged.”
Wolfe cautioned that despite hopes for additional tariff cuts, “some tariffs will likely remain,” and persistent macroeconomic uncertainties combined with already high valuations make it “hard to have conviction on autos cyclical names.”
Instead, the analysts recommend focusing on “quality suppliers with reliable growth above market, margin upside from own cost actions, strong FCF, and clear valuation upside.”
General Motors (NYSE:GM) and Ford (NYSE:F) were both maintained at Peer Perform, with Wolfe expressing a preference for GM due to its robust free cash flow and potential for greater tariff relief, while noting that Ford may have a more favorable Q2 outlook.
Concerns were also reiterated regarding Tesla (NASDAQ:TSLA), with Wolfe warning of a possible “air pocket” in the near term unless the company makes significant advancements in its autonomous vehicle technology.