Stellantis NV STLA has announced a cut in workforce at its Jeep manufacturing facilities in Detroit and Toledo, attributing the decision to California’s tough emissions requirements.
What Happened: As reported by Bloomberg on Dec. 7, 2023, Stellantis is reducing Jeep production due to anticipated fewer sales of gasoline-powered cars, particularly in states aligning with California’s emissions standards. The automaker complained to California’s regulators, asserting that the state’s rules put it at a competitive disadvantage.
Automakers are currently resisting the Biden administration’s efforts to boost fuel efficiency and accelerate the shift to electric vehicles. The auto industry argues that these stringent norms may lead to fines worth billions of dollars.
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Stellantis claims that California wrongly approved a 2019 pact between state regulators and four automakers, which allowed these manufacturers to voluntarily augment their average fuel economy to approximately 50 miles per gallon by 2026.
Despite its slower shift to electric vehicles, Stellantis’s Jeep Wrangler 4xe hybrid and Chrysler Pacifica hybrid are among the top-selling electrified vehicles in California. The company, facing falling sales for its Jeep brand, will issue notifications to local and state governments under the federal WARN Act, requiring employers to provide 60 days notice of mass layoffs or plant closures.
Why It Matters: Before this, Stellantis had faced difficulties with its Jeep Wrangler 4xe hybrid model. On Nov. 22, 2023, the auto giant announced a recall of over 32,000 vehicles due to a potential fire risk. This issue could have contributed to a decline in consumer confidence in the company’s electrified vehicles, impacting sales.
Additionally, executive changes were made at Stellantis North America on Nov. 29, 2023, to support the Jeep brand as the company prepared for an electric offensive in 2024. The job cuts could be seen as a part of that restructuring process.
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