Stellantis is the world's fourth largest automaker and in September it announced that it was looking for a successor for Tavares, 66, as part of a planned leadership change. Tavares' five-year contract was a little over a year from its expiration date in 2026, but the company said at the time that it was possible he might remain in the job beyond that.
The company said late Thursday that Tavares will step down in early 2026.
Tavares has been under fire from U.S. dealers and the United Auto Workers union after a dismal financial performance this year, caught off guard by too many high-priced vehicles on dealer lots. Tavares has been trying to cut costs by delaying factory openings, laying off union workers and offering buyouts to salaried employees.
Stellantis slashed its earnings forecast last month, saying it needed to make larger investments to turn around its U.S. operations amid a wider industry slump and increased competition from China.
Stellantis said at the time that it was accelerating efforts to improve operations in North America, bringing dealer inventory levels to no more than 300,000 vehicles by the end of the year, instead of the first quarter of 2025 as previously planned.
Stellantis was created in 2021 through the merger of PSA Peugeot and Fiat Chrysler Automobiles. It said in a statement that the formal process to find Tavares’ successor has already begun. The process is being led by a special committee of the board and will finish its work by the fourth quarter of 2025.
Shares of Stellantis fell nearly 5% at the opening bell Friday.