Stellantis, the company behind Fiat, Dodge and Jeep, has announced it plans to close one of its factories in February and lay off 1,200 workers. His reasoning? Pressure from COVID-19, sure, along with a hint of chip shortages, but mostly all those electric vehicles it has to make.
The plant in question is one that builds Jeep Cherokees in Illinois, and the news comes as the automaker gears up for union negotiations. While United Auto Workers states that “the transition to electrification also creates opportunities” at the plant, an unnamed Stellantis spokesperson told CNBC and The Wall Street Journal that it was instead the reason for the discontinuation. “The most impactful challenge is the rising costs associated with the electrification of the automotive market,” the company claims, adding that it is exploring other uses for the plant and trying to find work for the workers it is laying off.
Stellantis spends billions on EVs
But let’s go back for a second – one of the world’s largest automakers is saying it will have to close a factory indefinitely due to how much electrification costs? That’s a bold claim, especially since it comes from a company I’d consider a distant third in the race of the big three U.S. automakers to move their lineups from gasoline to batteries. It also doesn’t help that Stellantis has promised quite a few electrified Jeeps, and it’s hard to see why this factory couldn’t play a part in making those vehicles, at least one of which is coming out next year (and many of which are very hard to find ).
This isn’t to say Stellantis isn’t spending big on EVs — it’s pledged to share a bill of up to $3 billion with Samsung for an Indiana battery plant, and it’s investing $4.1 billion this time in a similar facility in Canada with LG . But that’s not an unimaginably large investment compared to some of its peers: GM is spending a whopping $7 billion on one of its three EV battery plants in the works, Honda is helping build a $4.4 billion plant in Ohio (and is spending $700 million more to refurbish existing facilities), and Ford has announced it is closing three EV-related sites builds with a price tag of more than $11.4 billion.
Ford is an interesting comparison, though, as it also went through a recent round of layoffs, cutting about 3,000 jobs. No prizes for guessing any 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 every aspect of the way we have worked for more than a century.” That, of course, meant job cuts.
It’s too early to tell if EVs will become a common scapegoat if the auto industry continues to run layoffs, but now we have at least two companies trying to portray thousands of people’s livelihoods as the cost of the future. (EV-native companies like Tesla or Rivian, which have also had their own mass layoffs this year, don’t have that luxury.)