Jeep maker to close Cherokee plant citing high EV production costs as it may charge to unlock heated seats
The parent company of the Jeep brand – Stellantis – announced that it will be closing its old plant in Belvidere, IN as part of a restructuring initiative aimed to compensate for "the increasing cost related to the electrification of the automotive market." The automaker’s CEO Carlos Tavares often cites that electric cars cost up to 50% more to make than alternative vehicles with internal combustion engines, yet Stellantis has to make sure that the EV transition produces cars that are affordable for the average buyer still.
On the chopping block at the Belvidere plant are 1,350 jobs of both salaried and hourly workers, and Stellantis will be adding the topic to the big sit-down it has scheduled with the United Auto Workers union next year that aims to hash out their relationships as it pursues its 2030 electrification strategy. Needless to say, UAW President Ray Curry is rather unhappy about the closure:
We believe Stellantis is grossly misguided in idling this plant which has produced profits for the company since 1965. Not allocating new product to plants like Belvidere is unacceptable. Announcing the closure just a few weeks from 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 are of the opinion that if the automaker is building additional factories with electric vehicles in mind, its older and less efficient plants that are not fit for the purpose have to go indeed. "Having an assembly plant well below its capacity, there's a significant overhead cost associated with that… There's a market shift because of the EVs," says Sam Abuelsamid, an electric vehicle industry researcher for Guidehouse. Sales of the Jeep Cherokee assembled in the Belvidere plant had fallen nearly 60% in the first nine months of the year, making the COO comment that the factory wasn’t operational “very often,” but when it made Cherokees, "we've got a set of the population that still loves the vehicle."
The UAW Vice President still thinks that the plant should be saved by repurposing given all the federal and state subsidies that Stellantis is getting. "The transition to electrification also creates opportunities for new product. 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," they argue. State Senator Stadelman is of the opinion that Stellantis may still opt for repurposing the plant rather than closing it as "we passed several bills including one two weeks ago, a second round of incentives, and the most recent round was geared toward existing plants."
In order to recoup some of its electrification strategy costs, Stellantis may also be preparing to go big on the novel Feature-on-Demand microtransaction concept where you pay to unlock extra horsepower, heated seats, or various media accoutrements. It already teased the 2023 Dodge Charger EV which may be sharing a platform with the electric RAM it will show at CES, and the move to microtransactions may intensify in the EV era by charging for the RAM's extra towing capacity as well.
Those software locks are rather controversial, and there are proposals in some states to ban the practice altogether, so it remains to be seen to what extent Stellantis will use the Feature-on-Demand microtransaction concept on its future electric cars that it tries so hard to cut the production costs of.