As demand for electric vehicles declines, workers caught in the middle face an uncertain future

This year promised to be a good one for workers at the GM Orion Assembly plant in a working-class neighborhood of Detroit. After winning a pay raise following last year’s United Auto Workers strike, they were set to begin production later this year on a flagship product for GM: the Chevy Silverado electric pickup.

But like thousands of other workers on the front lines of the electric vehicle transition, they have hit some bumps in the road. GM told the nearly 1,000 workers at the Orion plant in December that they were being laid off until the end of 2025 to make technical improvements and cool demand for electric vehicles. Their last paycheck was their holiday pay the week of Christmas, and many are still waiting to see if they will be offered a job at another factory.

“It’s been a very somber time here this past month,” said a plant employee who asked not to be identified because he was not authorized by GM to speak to the media. “We thought we finally had some peace. We were supposed to be out for a year at most due to adjustments, and now GM is revisiting the EV market. I don’t think the economy is hurting; I think the auto industry is hurting. I think they put the carriage before the horse.”

While electric vehicle sales have continued to rise, demand has slowed from the breakneck pace seen in 2022 and 2021, leading automakers, including market leader Tesla, to predict a sales slowdown this year. That’s causing U.S. automakers to pull back on some of the lofty electric vehicle ambitions they’ve poured billions of dollars into in recent years, putting thousands of workers at risk.

“At the end of the day, it all comes down to demand, and demand just isn’t showing up where all these CEOs were thinking. So a lot of the initial targets that GM or Ford put forward a few years ago may have turned out to be a little too optimistic and probably too aggressive,” said Gabe Daoud, senior renewable energy analyst at TD Cowen. “I think everyone expected the entire fleet to change overnight and become electric, but that is obviously just impossible and impractical.”

Along with GM, Ford said in January it is cutting back on production of its electric pickup, the F-150 Lightning, due to declining demand, eliminating 1,400 workers from its Dearborn, Michigan, production line starting in April. Ford said the majority of these employees will be reassigned to other roles in the same complex, transferred to other plants that will make gas-powered vehicles, or offered early retirement.

Hundreds of workers at electric vehicle battery factories have also been laid off in recent months in Michigan, Georgia and California. North Carolina-based Albemarle, which supplies battery makers with lithium, also said in January it was cutting an unspecified number of jobs due to changing market conditions.

Ford said last fall it would delay about $12 billion in previously announced EV spending, pushing back construction of one of its two battery factories in Kentucky and canceling plans for a battery factory in Michigan that will now eventually employ 1,700 workers. will be scaled back from the planned 2,500. .

Demand for electric vehicles has continued to grow, with a record 317,000 electric vehicles sold in the fourth quarter of 2023, up 40% from a year earlier, according to Cox Automotive. But the pace of that growth has slowed compared to 2021 and 2022, when the sector saw 70% and 80% growth year-on-year. Over the past three years, companies have poured billions into electric vehicle investments, spurred by stimulus from the Biden administration.

Analysts have largely attributed that decline in demand to the relatively high price of electric vehicles, especially as auto loan rates have risen, and consumer concerns about a lack of charging infrastructure.

“I think you’re seeing a change in how quickly people are willing to buy electric cars right now because they’re expensive and there are concerns about charging infrastructure,” said Alan Amici, CEO of the Center for Automotive Research. “If you are an efficient car manufacturer, you try to adjust your production to demand. It makes no sense for anyone to fill a yard with electric cars that are not sold.”

The sector faces further uncertainty from the upcoming US presidential election, where electric vehicle incentives introduced under the Biden administration could be reversed or halted under a second Trump administration, analysts said.

The layoffs came after a victory for autoworkers last fall, when they secured a more than 25% pay increase and other benefits after a more than month-long strike. The new contract also provides additional benefits to protect laid-off workers, such as the ability to more easily transfer to factories that make EV batteries, and includes early retirement incentives if automakers need to reduce their workforces, said Art Wheaton, director of labor studies. at Cornell University.

“In the collective bargaining agreement that they just negotiated, the UAW prioritized job security first and foremost,” Wheaton said.

At the Orion plant, workers had expected to be laid off for much of 2024 as the plant shifted production from the Chevy Bolt to the new electric Silverado, but many were caught off guard when GM announced the layoffs in December extended. with an extra year, the factory worker said.

“It’s very devastating, not just for our workforce, but for the entire community there,” the factory worker said. “Business was growing, things were looking good and people were happy. All we got was support from the city, and all this money came from the state, and then they do this.”

The factory, which has seen ups and downs since it was built in the 1980s, was the center of much hype just two years earlier. At a news conference, Governor Gretchen Whitmer and GM officials announced the company’s plan to spend $4 billion to expand and renovate the factory to produce the Silverado electric truck, as part of a broader investment of 7 billion dollars in the state that GM said would support 5,000 people. jobs.

In return for GM’s investment, the state of Michigan gave the company hundreds of millions of dollars in grants, money for infrastructure and utility upgrades, and state and local tax credits.

GM plans to offer all laid-off workers jobs at other Michigan plants, and about half have already been placed or are in the process of being placed in new positions, GM spokesman Kevin Kelly said.

But moving could be a burden for some workers, including those who already travel more than an hour to get to the Orion plant and others who may not be able to travel longer because of family or childcare obligations, the factory worker said.

For UAW workers who have not been transferred to another plant, GM will provide compensation on top of their state unemployment for up to two years, amounting to 84% of their regular wages, along with their health care coverage, Kelly said.

These benefits will not apply to non-GM employees at the plant who are not covered by the UAW contract with GM, such as those working in maintenance, sanitation and security jobs.

Despite the layoffs and production delays, local officials still expect the planned investment in the factory to be a boon to the working-class community that still adheres to its motto – “where life is a holiday” – since its 19th century. century tourist destination.

Orion Township Supervisor Chris Barnett said that despite the production delays, several suppliers that will make parts for the EV Silverado, such as the seats and bed liners, have continued to make plans to build new facilities nearby, and that the project has also helped other companies such as hotels and restaurants.

While Barnett said he was disappointed to hear that production was being delayed, he wasn’t surprised given the amount of construction that had to take place in a relatively short period of time to meet the EV Silverado’s planned 2024 rollout. He said work on the plant has continued and he was there recently for a meeting.

“While no one is excited that it has been delayed a bit, I don’t feel like this project will be abandoned or shelved,” Barnett said. “When this news came out, we all internally thought: that makes sense. There was no one to say, “The sky is falling.” There was no panic.”

In Hardin County, Kentucky, officials are in a similar position. Ford was expected to open two battery factories there, one in 2025 and another in 2026, that would employ 5,000 workers. But in October the company said it was delaying the opening of the second factory due to declining demand for electric vehicles.

Still, local officials expect a huge boost to the economy from just one plant, which will create at least 2,500 jobs and transform the largely rural community about an hour’s drive from Louisville, Hardin County Judge/Executive Keith Taul said.

“It totally changed everything in the area with these two huge buildings,” Taul said. “I have been in the automotive sector for thirty years, I have traveled the world and therefore seen a number of major projects. But this has to be one of the biggest I’ve ever seen.”

Several suppliers are already moving to the region to be closer to the factory, and developers have been looking at land for housing with the expectation that thousands of workers will eventually move to the region, Taul said. The delay at the second plant will give the community more time to prepare for the influx of workers the province is anticipating.

“There will be bumps in the road for something so new,” Taul said. “I think most people understand that Ford and their partner are not going to produce countless batteries that won’t sell. They have to meet the demand that is there.”

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