Jeep-owner Stellantis announces mass layoffs, blames California

Stellantis has announced that it plans to cut what will likely be thousands of jobs from its Jeep plants in Detroit and Toledo, Ohio, blaming California’s emissions regulations for putting the company at a competitive disadvantage.

Stellantis, which also owns the Ram, Chrysler, Dodge, and Fiat brands, has indicated that 2,455 workers may be impacted at the Detroit plant where its makes the Jeep Grand Cherokee, as well as an additional 1,225 workers at a plant in Toledo that produces the Jeep Wrangler and Gladiator, according to The Detroit News. To curb production due to lagging sales of the Jeep brand, Stellantis plans to shift from an alternative work schedule to a traditional two-shift operation at the Toledo plant, and shave off one of its three shifts at the Detroit plant, which employs 4,600 people. The job losses will be in effect as early as February 5.

Stellantis, among other automakers, has been actively pushing back against Biden’s efforts to reduce carbon emissions and boost electric vehicles, arguing that strict regulations could result in billions of dollars of fines for the company.

According to Reuters, since the summer Stellantis has limited its shipments of both ICE vehicles and EVs to dealers in the 14 states that have adopted California Air Resources Board (CARB) rules, which are stricter than national criteria. Meaning, if you shopped in those states, only plug-in hybrid SUVs would be readily available in stock, but you’d have to special order an all-electric version or ICE models. Dealers in states that don’t adhere to CARB standards had the opposite scenario play out, of having no or very few hybrids in stock, and an ICE-only inventory. The rationale for all of this maneuvering, as The Drive points out, is in the 14 states that adhere to the California rules, manufacturers need to sell a certain percentage of zero-emissions vehicles and plug-in hybrids, meaning Stellantis had to prioritize these areas.

But here’s the rub for Stellantis: In 2020, Ford, Honda, Volkswagen, and BMW struck a special agreement with California to play by a different set of rules, where compliance is measured by sales nationwide, not just in CARB states. Stellantis says that changes the game and puts its company at a disadvantage because those numbers are easier to meet.

Volvo and Geely signed on to the pact with California following the original four automakers, and Stellantis tried to join but was turned down, according to Bloomberg. Why? Stellantis argues that it is being punished for when Chrysler publicly questioned California’s authority to establish its own rules back in 2019, along with other automakers, including General Motors and Toyota, as The Drive cited. Yesterday, Stellantis submitted a petition to California’s Office of Administrative Law, accusing the state of signing “underground regulatory scheme” with other automakers.

Electrek’s Take

Stellantis has been slow to shift to EVs, but it has been pouring billions into the effort. The Jeep Wrangler 4xe and Chrysler Pacifica hybrids are some of the best-selling EVs in California. But business hasn’t been steady: Last month, the automaker announced a recall of more than 32,000 vehicles due to a potential fire risk. And falling sales for ICE versions of the Jeep brand, mixed with high interest rates, has forced its hand into full-blown cost-cutting mode. And that, it says, means upending the lives of thousands of workers.

Still, it’s certainly not the first time the company has pointed a finger at the transition to EVs as the reason for layoffs. Earlier this year, Stellantis laid off about 1,350 workers from its plant in Illinois for those same reasons.

Interesting timing too, as the Big Three in Detroit – General Motors, the Ford Motor Company, and Chrysler (which Stellantis owns) – are also looking for ways to cut costs as they just agreed to what will amount to “record” pay increases following the United Auto Workers’ strikes this year. Lots of jobs are on the chopping block in the automobile industry, so we’ll be hearing that term “restructuring” a lot these days: Yesterday Volkswagen confirmed it too would cut thousands of jobs in Germany in an effort to slash $11 billion in costs.