Stellantis to Idle its Illinois Assembly Plant Indefinitely, Citing the High Costs of Electric Vehicles
Automaker Stellantis, which is the parent company of the Chrysler Jeep, Dodge and Ram, announced on Friday it will indefinitely halt production at its assembly plant in Belvidere, Illinois on February 28, 2023.
The automaker has no formal plans to reopen the 5 million square foot factory and cited the rising costs of its shift to electric vehicles as the reason for the unexpected closure. Early this year, Stellantis announced plans to transform Chrysler into an electric-only brand by 2028.
In a statement, the Stellantis wrote it "has been adversely affected by a multitude of factors like the ongoing COVID-19 pandemic and the global microchip shortage, but the most impactful challenge is the increasing cost related to the electrification of the automotive market."
In an interview with Reuters earlier this year, Stellantis Chief Executive Officer Carlos Tavares said that the costs for automakers to transition to electric cars are "beyond the limits" of what the industry can sustain.
"What has been decided is to impose on the automotive industry electrification that brings 50% additional costs against a conventional vehicle," he said. "There is no way we can transfer 50% of additional costs to the final consumer because most parts of the middle class will not be able to pay."
The plant in Illinois employs around 1,350 workers which represent the United Auto Workers Union (UAW). The closure will likely result in indefinite layoffs. The plant is the only Stellantis manufacturing facility in Illinois.
The United Auto Workers union vowed to fight back against the announcement. In a statement, UAW Vice President Cindy Estrada said the union was "deeply angered" by the automaker's sudden decision to idle the plant without a plan going forward.
Estrada noted that Stellantis imports many vehicles to the U.S. and the automaker received billions in government incentives to transition to clean energy. "It is an insult to all taxpayers that they are not investing that money back into our communities," Estrada said in a statement.
The Belvidere plant most recently produced the Jeep Cherokee and Compass SUVs and has a long history.
Construction on the Belvidere assembly plant began in 1964. The first vehicle rolled off the assembly line in July 1965. From 1965 to 1977 the plant built various two-door and four-door Plymouth and Dodge models, including the Chrysler Town & Country station wagon.
In 1977, the plant was retooled for production of front-wheel drive vehicles. From 1978-1987, the Belvidere assembly factory produced the Plymouth Horizon and Dodge Omni.
In 1987, the plant underwent a $367-million, state-of-the-art, 16-week model changeover to produce the Chrysler New Yorker and Dodge Dynasty, the company's full-size, front-wheel-drive, four-door sedans.
Before Stallantis, Fiat Chrysler Automobiles (FCA) announced in 2016, that it would invest $350 million in the Belvidere Assembly to produce the Jeep Cherokee. Production of the Cherokee was moved from Toledo, Ohio, in 2017 Cherokee production began on June 1, 2017. On July 26, 2021, the plant began operating on a single shift.
The Belvidere factory is one of three in Illinois, including the Ford Motor plant in Chicago which employs over 5,000 workers. Ford's Illinois factory currently produces the Ford Explorer, Police Interceptor Utility and Lincoln Aviator SUVs.
Electric truck maker Rivian also produces vehicles in the state at a former Mitsubishi Motors factory in Normal, Illinois that the EV startup acquired in 2016. Its located about 130 miles away from Stellantis' Belevire assembly facility. Rivian's electric vehicle factory, in Normal is currently building the Rivian R1T pickup, R1S SUV, as well as electric delivery vans for ecommerce giant Amazon.
A year ago, Illinois Governor JB Pritzer signed the "Reimagining Electric Vehicles in Illinois Act" into law, which aims to incentivize electric vehicle production across the state. It includes state incentives to build new facilities, train Illinois residents for high-tech roles in the industry and create thousands of new jobs. Pritzer's administration aims to have one million electric vehicles on the state's road by 2030.
Stellantis was created via a merger between Italian-American automaker Fiat Chrysler Automobiles (FCA) and Groupe PSA, the parent company of French automaker Peugeot. The $52 billion dollar merger was agreed to in Dec 2019 and the new company was officially confirmed on Jan 4, 2021 after a vote from shareholders of both companies.
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