Peterhansel's interest in motorsport began through his father, Jean-Pierre, an amateur rally driver and trial biker. Stéphane started riding small motorbikes at age eight. In the 1970s, he also became involved in skateboarding, becoming a French national champion in slalom, downhill, freestyle, and combined disciplines. The town of Vesoul, near his birthplace, created the Skatepark Peterhansel in recognition of his impact on French sport. At 14, Peterhansel chose to focus full-time on motorbikes, stopping skateboarding. He made his first professional start at 18 in the French Enduro Championship, which he went on to win three times. He also won the Trophée 500 three times (1985, 1986, 1987) and the Trèfle Lozérien a record nine times. He was picked up by the official Yamaha factory team after impressing with Husqvarna.
Peterhansel's dream was always to compete in and win the Dakar Rally. He made his debut at the Paris to Dakar Rally in 1988 in the motorcycle category for Yamaha, securing a stage win in his first outing. He went on to win the event on a motorcycle six times: in 1991, 1992, 1993, 1995, 1997, and 1998. His first Dakar win in 1991 was his most favorite. He is also a two-time World Enduro Champion.
After winning six times on bikes and breaking Cyril Neveu's record, Peterhansel decided to switch to the car category in 1999, seeking a new challenge and greater safety. He finished seventh in his first car outing in 1999 and second in 2000. He joined the works Mitsubishi programme in 2003 and won the Dakar Rally for the Japanese manufacturer in 2004, 2005, and 2007. This made him the second driver in history to win both on a motorbike and in a car, after Hubert Auriol.
Following Mitsubishi's withdrawal, Peterhansel joined X-Raid. He took his tenth Dakar Rally victory in 2012 driving an X-Raid-prepared Mini Countryman, and his eleventh in 2013 for the same team, solidifying his status as the most successful competitor in the event's history. In 2014, while leading the Dakar on the final stage, he was controversially ordered to allow his team-mate Nani Roma to overtake and win, resulting in Peterhansel finishing second.
In 2015, Peterhansel joined Peugeot as the manufacturer returned to Dakar competition for the first time since 1990. After spending 2015 learning the car, he claimed Peugeot's first win of the modern era in the 2008 DKR in 2016. He took his twelfth and thirteenth Dakar victories in 2016 and 2017 with the team, winning in the 2008 DKR and then the 3008 DKR. In 2021, Peterhansel became the only competitor to have won the Dakar Rally in Africa, South America, and Asia.
Peterhansel later joined Audi, participating in the design and development of their electric vehicle. His three attempts with Audi were unsuccessful, first due to teething problems, then a driving error in 2023, and various incidents in 2024. He achieved his 50th stage victory in a car, equalling Ari Vatanen's record. A long series of 29 consecutive Dakar rallies contested since 1995 will end in 2025 as Peterhansel takes a break to compete in motorcycle races, including the FIM Enduro Trophy. In 2026, at the age of 60, he will join Defender Rally Team for his 36th Dakar, entering the Stock category with the Defender Dakar D7X-R.
From 1999 to 2018, his Dakar co-driver was Jean-Paul Cottret. Since the 2018 Baja Portalegre 500, Peterhansel and Cyril Despres swapped co-drivers, with David Castera becoming Peterhansel's co-driver and Cottret moving to Despres. He also competed in the 2018 Rallye du Maroc in the UTV category with a Yamaha YXZ, with his wife Andrea Mayer as co-driver. For the 2026 Dakar Rally with Defender Rally Team, his co-driver will be Michaël Metge.
Peterhansel competed in the Race of Champions in 2005 and 2006. In 2002, he competed in the French Touring Car Championship in a Nissan Primera, achieving a peak finish of sixth place at Dijon.
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