Jeep maker closes Cherokee plant, citing high EV production costs as it can charge to unlock heated seats

The parent company of the Jeep brand – Stellantis – announced that it will close its old factory in Belvidere, IN as part of a restructuring initiative aimed at compensating for “the increasing costs in connection with the electrification of the vehicle market.” The automaker’s CEO Carlos Tavares often cites that electric cars cost up to 50% more to manufacture than alternative combustion engine vehicles, but Stellantis needs to make sure the EV transition produces cars that are still affordable for the average buyer.

On the chopping block at the Belvidere plant are 1,350 white-collar and hourly jobs, and Stellantis will add the topic to the big meeting it has planned with the United Auto Workers union next year aimed at hashing out their relationship as it continues its electrification strategy for 2030. Needless to say, UAW President Ray Curry is pretty unhappy about the shutdown:

We believe that Stellantis is grossly misguided to idle this facility that has been profitable for the company since 1965. Not allocating new product to facilities like Belvidere is unacceptable. Announcing the closing just weeks after the holidays is also a cruel disregard for the contributions of our members from UAW Locals 1268 and 1761. We will fight back against this announcement.

Analysts believe that if the automaker builds additional factories with electric vehicles in mind, its older and less efficient facilities that are not fit for purpose really need to go. “Having an assembly plant far below its capacity, there is a significant overhead associated with that… There is a market shift due to the electric cars,” said Sam Abuelsamid, electric vehicle industry researcher for Guidehouse. Sales of the Jeep Cherokee assembled at the Belvidere plant were down nearly 60% in the first nine months of the year, prompting the COO to comment that the plant wasn’t operating “very often,” but when it did the Cherokees, “we have a group of the population that still loves the vehicle.”

The UAW vice president still believes the plant should be saved by repurposing given all the federal and state subsidies Stellantis receives. “The transition to electrification also creates opportunities for new products. Companies like Stellantis are getting 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“, they argue. Senator Stadelman believes that Stellantis could still choose to reuse the facility rather than close it as “we passed several bills including one two weeks ago, a second round of incentives, and the latest round targeting existing facilities.”

To recoup some of its electrification strategy costs, Stellantis may also be preparing to go big on the new Feature-on-Demand microtransaction concept where you pay to unlock extra horsepower, heated seats or various media equipment. It already teased the 2023 Dodge Charger EV that may share a platform with the electric RAM it will show at CES, and the move to microtransactions could intensify in the EV era by also charging for the RAM’s extra towing capacity.

These software locks are quite controversial, and there are proposals in some states to ban this altogether, so it remains to be seen to what extent Stellantis will use the Feature-on-Demand microtransaction concept on their future EVs as they try so hard to lower production costs for.

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