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© Reuters. A Stellantis sign is seen outside its headquarters in Auburn Hills, Michigan, U.S., June 10, 2021. REUTERS/Rebecca Cook
By David Shepardson and Ben Klayman
WASHINGTON/DETROIT (Reuters) -Chrysler parent Stellantis on Friday said it will indefinitely halt operations at an assembly plant in Illinois in February, citing the rising costs of electric vehicle production.
The automaker, which employs about 1,350 workers at the Belvidere, Illinois, plant that builds the Jeep Cherokee SUV, said the action will result in indefinite layoffs and added it may not resume operations as it considers other options.
Stellantis said the industry "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."
Stellantis has said it will invest over 30 billion euros ($31.6 billion) through 2025 on electrifying its vehicle lineup. It also has said it expects EVs to make up 100% of its sales in Europe and 50% in the United States by 2030.
The White House did not immediately comment, but has repeatedly argued EVs will boost U.S. auto employment.
Tim Ferguson, shop chairman for United Auto Workers (UAW) union Local 1268, which represents the Illinois plant's hourly workers, said in an interview that company documents show Cherokee production being moved to the company's Toluca, Mexico, plant.
"It's a pretty tough pill to swallow that they're going to ship your vehicle to Mexico," Ferguson said.
"To me there is no question about it," he added. "Their plan is to close this plant."
Stellantis spokeswoman Jodi Tinson would not comment on whether the Cherokee production would be moved to Toluca. "We are not commenting on the future of the Cherokee."
The Stellantis announcement came on the same day workers at a General Motors-LG energy battery cell factory in Ohio voted overwhelmingly to join the United Auto Workers, marking a big win for the union seeking to organize the growing EV supply chain.
Sam Fiorani, head of production forecasting firm AutoForecast Solutions, said automakers will continue to pull "money away from slow-selling, pure-ICE vehicles, like the Jeep Cherokee." He also said the replacement of the Cherokee, along with other vehicles on a new electrified platform, will be produced in Toluca.
The company said it also is working to identify other opportunities to repurpose the Belvidere facility and has no additional details to share at this time.
Fiorani said the UAW and Stellantis could reach a deal in contract talks next year for a new vehicle for the plant "but any new product redirected its way will take investment and time to retool the plant, leaving Belvidere empty for a year or more."
UAW Vice President Cindy Estrada noted Stellantis imports many vehicles into the United States and said "companies like Stellantis receive 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."
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