Stellantis is laying off 400 employees in connection with the transition to electric vehicles

DETROIT (AP) — Jeep maker Stellantis has laid off about 400 employees in the U.S. as the company moves from combustion engines to electric vehicles.

The company formed during the 2021 merger between PSA Peugeot and Fiat Chrysler said its employees are primarily in engineering, technology and software at its headquarters and technical center in Auburn Hills, Michigan, north of Detroit. Affected employees were notified as of Friday morning.

“As the automotive industry continues to face unprecedented uncertainties and increased competitive pressure around the world, Stellantis continues to make the right structural decisions across the business to improve efficiencies and optimize our cost structure,” the company said in a prepared statement on Friday .

The cuts, effective March 31, will amount to about 2% of Stellantis’ global workforce in engineering, technology and software, the statement said. Employees will receive a separation package and transition assistance, the company said.

“While we understand this is difficult news, these actions will better align resources while preserving the critical skills needed to protect our competitive advantage as we remain focused on implementing our EV product offensive,” the statement said. declaration.

CEO Carlos Tavares has repeatedly said that electric vehicles are 40% more expensive to produce than gasoline-powered ones, and that the company will have to cut costs to make electric vehicles affordable for the middle class. He says the company is constantly looking for ways to operate more efficiently.

US electric vehicle sales grew 47% last year to a record 1.19 million, while electric vehicle market share rose to 7.6% from 5.8% in 2022. But sales growth slowed toward the end of the year. In December they rose by 34%.

Stellantis plans to launch 18 new electric vehicles this year, eight of them in North America, increasing global EV supply by 60%. But Tavares told reporters on earnings calls last month that “the job is not done” until electric vehicle prices fall to the levels of combustion engines – something Chinese manufacturers can already achieve through lower labor costs.

“The Chinese offensive is possibly the biggest risk that companies like Tesla and us currently face,” Tavares told reporters. “We have to work very, very hard to ensure that we can offer consumers a better offer than the Chinese.

Last year, Stellantis offered buyout and early retirement packages to about 6,400 non-union employees, but the company did not say how many of them took up the offer.

In 2022, the company announced that it planned to close a factory in Belvidere, Illinois, and lay off 1,350 people in an effort to reduce its manufacturing footprint. But during contentious contract talks last year with the United Auto Workers, Stellantis agreed to keep the plant open for electric car production and add a battery plant in Belvidere.

The world’s third-largest car manufacturer reported a net profit of 7.7 billion euros in the second half of last year. That was less than 8.8 billion euros in the same period a year earlier.

The workforce reduction at Stellantis comes as rivals Ford and General Motors cut thousands of white-collar jobs, also due to the transition to electric vehicles.

In the summer of 2022, Ford let go of about 4,000 full-time and contract workers in an effort to reduce costs. CEO Jim Farley has said that much of Ford’s workforce does not have the right skills as the company transitions from internal combustion vehicles to battery-powered vehicles.

About 5,000 GM salaried employees, many in engineering, took early retirement last spring and made buyout offers.

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