Fiat, Dodge, and Jeep’s parent company, Stellaris, has said that it will close one of its operations in February and lay off 1,200 employees. Is it logical? COVID-19 pressure, yes, along with a sprinkle of chip shortages, but primarily all the electric vehicles it needs to produce.
The report is released as the carmaker prepares for union talks at the Illinois facility that makes the in question Jeep Cherokees. United Auto Workers contends that “the shift to electrification also presents prospects” for the plant, while a Stellantis official who declined to be identified told CNBC and The Wall Street Journal that it was the cause of the halt. The company asserts that the rising costs associated with the electrification of the automobile industry are the most significant obstacle, adding that it is looking into other uses for the facility and is working to find employment for the staff it is laying off.
Stellaris is spending billions on EVs
But let’s back up for a second — one of the world’s largest automakers is saying it has to shutter a plant indefinitely because of how much electrification is costing. That’s a bold claim, especially since it’s coming from a company I’d consider to be in a distant third in the big three American automakers’ race to move their lineups from gas to batteries. It also doesn’t help that Stellantis has been promising quite a few electrified Jeeps, and it’s hard to see why this factory couldn’t play a role in making those vehicles, at least one of which is due out next year (and many of which have been very difficult to find).
This isn’t to say that Stellantis isn’t spending big on EVs — it’s promised to split an up to $3 billion bill with Samsung for a battery factory in Indiana, and it’s investing $4.1 billion in a similar facility located in Canada, this time with LG. But that’s not an unthinkably large investment compared to some of its peers: GM is spending a whopping $7 billion on one of its three EV battery factories in the works, Honda’s helping build a $4.4 billion plant in Ohio (and spending $700 million more to retool existing facilities), and Ford has announced it’s building three EV-related locations with a price tag of over $11.4 billion.
Ford’s an interesting comparison, though, because it also went through a recent round of layoffs, cutting around 3,000 jobs. No prizes for guessing one of the excuses it gave employees; “We have an opportunity to lead this exciting new era of connected and electric vehicles,” read a memo from CEO Jim Farley and chairman Bill Ford. “Building this future requires changing and reshaping virtually all aspects of the way we have operated for more than a century.” That, of course, meant cutting jobs.
It’s too early to say whether EVs are going to become a common scapegoat if the auto industry keeps carrying out layoffs, but now we have at least two companies trying to paint thousands of people’s livelihoods as the cost of the future. (EV-native companies like Tesla or Rivian, which have also had their massive rounds of layoffs this year, don’t have that luxury.)
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