By Neil Unmack.

LONDON (Reuters Breakingviews) - Carlos Tavares has resigned. The Stellantis CEO's sudden exit yesterday may be seen as a necessary evil given the difficult 2024 the automaker is experiencing. However, his successor will have to manage increasingly difficult relations with President-elect Donald Trump and the European Union, as well as make wise choices in technology. Chairman John Elkann may have to settle for checking off only the first of these boxes.

A master at cutting costs and a self-described "performance maniac," Tavares seemed the best person to oversee the merger of Fiat Chrysler and Peugeot in 2021. He was the equally logical successor to Sergio Marchionne, who had arranged Fiat's acquisition of Chrysler. He peaked in 2023, when Stellantis posted an operating margin close to 12 percent, beating competitors Ford and GM, taking home a salary of 36.5 million euros. This year, however, its performance has been worse, with Stellantis announcing a profit warning in September due to weakness in the key U.S. market, which accounted for just over half of its operating profit in 2023.

Stellantis' strength in the United States may have been a mirage. It raised prices after production was halted due to Covid-19, but cars like the Grand Cherokee looked expensive compared to cheaper vehicles like Hyundai's Santa Fe, resulting in unsold cars and declining market share. Recently, the group's U.S. dealers have openly criticized Tavares, calling for the automaker to produce vehicles that "Americans want to buy and can afford," and it appears that Tavares disagrees with the board on what the right solution is. Stellantis' stock price has more than halved since March.

Tavares' exit leaves Stellantis in limbo. Elkann, scion of Fiat, CEO of Exor and chairman of Ferrari, will head a new interim executive committee.

The Stellantis situation calls for a Marchionne-style figure to shake things up, but a political operator skilled in mediation might also be more appropriate. Trump has vowed to hit automakers that import low-cost vehicles into the United States from Mexico with tariffs, which S&P analysts say could affect a quarter of Stellantis' Ebitda in 2025. Managing EU political circles will also be key, given looming sanctions on fuel-efficient car sales, and the next CEO will have to make the right technology choices. Chinese competition will hurt automakers that are unable to offer cars with low-cost electric batteries or sophisticated technologies, such as driver assistance and entertainment features.

Few candidates hold all the cards. Luca de Meo has been able to turn Renault around, but Stellantis may pose a bigger challenge. Elkann could conceivably look outside the auto industry-Marchionne had little such experience when he took over at Fiat, and Benedetto Vigna, CEO of Ferrari, previously worked at semiconductor group STMicroelectronics. Given the difficulties, an executive with experience in the United States might be the ideal solution: Antonio Filosa, Ceo of the Jeep brand, or former Fiat Chrysler CEO Mike Manley.

If Elkann can find a credible successor quickly, Tavares' exit could revive Stellantis, but today's nearly 10 percent drop in the stock suggests that investors are refraining from making a judgment call. Appointing a U.S.-focused expert as soon as possible may be the fastest way to allay their fears.

(Translated by Laura Contemori, editing Stefano Bernabei)