Stellantis to shut down its Illinois plant indefinitely due to the high cost of EV

Stellantis (STLA.MI), the parent company of Chrysler, announced on Friday that it would permanently shut down an assembly facility in Illinois in February due to the escalating expenses of producing electric vehicles.

In a statement, the manufacturer said it would lay off all 1,350 people at its Jeep Cherokee assembly factory in Belvidere, Illinois, indefinitely and that it may not reopen while it analyses its alternatives.

According to Stellantis, “the most impacting obstacle is the increasing cost associated with the electrification of the automotive sector.” The business “has been badly affected by a myriad of reasons like the ongoing COVID-19 epidemic and the global microprocessor scarcity.”

Stellantis has pledged to invest more than 30 billion euros ($31.6 billion) in electrifying its vehicle fleet by 2025.

It has also predicted that by 2030, EVs will account for all of its sales in Europe and half of them in the United States.

The White House didn’t respond right away, but they’ve said before that EVs are good for U.S. car workers.

The United Auto Workers (UAW) union Local 1268, which represents the hourly workers at the Illinois plant, has a shop chairman named Tim Ferguson, who said in an interview that corporate documentation shows Cherokee production being relocated to the company’s Toluca, Mexico, plant.

Having your car shipped to Mexico is “a really terrible pill to take,” as Ferguson put it. ‘To me, there is no question about it,’ he went on. It is in their plans to shut down this facility.

Jodi Tinson, a spokesperson for Stellantis, declined to say whether or not filming on Cherokee would be relocated to Toluca.

To speculate on the Cherokee people’s fate is not something we’re doing.

The United Auto Workers union scored a major victory in its effort to organize the expanding electric vehicle supply chain on the same day that Stellantis made its announcement, when workers at a General Motors-LG energy battery cell factory in Ohio voted decisively to join the union.

Automakers will continue to shift “money away from slow-selling, pure-ICE vehicles like the Jeep Cherokee,” according to Sam Fiorani, CEO of production forecasting firm AutoForecast Solutions.

He also confirmed that Toluca would be the location where the next-generation Cherokee and other vehicles based on the forthcoming electric platform are manufactured.

There are currently no other details to share, but the company did say it is actively seeking out additional opportunities to reuse the Belvidere plant.

Fiorani speculated that the UAW and Stellantis could strike an agreement on a new vehicle for the plant during contract discussions in the following year, but that “any new product steered its way will entail money and time to retool the plant, leaving Belvidere idle for a year or more.”

Vice President Cindy Estrada of the United Auto Workers remarked that Stellantis imports a large number of automobiles into the United States. “Government incentives to switch to renewable energy are in the billions of dollars, and companies like Stellantis benefit from this.

To not reinvest this money into our communities is an insult to all taxpayers.”

Source: Reuters

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