Jeep maker Stellantis is letting go of approximately 400 office workers in the U.S. because of changes in the car industry from regular engines to electric cars.
The company, formed from the merger of PSA Peugeot and Fiat Chrysler, said the workers mostly work in engineering, technology, and software at the headquarters and technical center in Auburn Hills, Michigan. Employees who are affected started getting notices on Friday.
The company said in a statement on Friday, “As the auto industry continues to face unprecedented uncertainties and heightened competitive pressures around the world, Stellantis continues to make the appropriate structural decisions across the enterprise to improve efficiency and optimize our cost structure.”
The layoffs, starting from March 31, affect about 2% of Stellantis’ U.S. workforce in engineering, technology, and software. Workers who are laid off will receive a separation package and help with transitioning to new jobs, according to the company.
“While we understand this is difficult news, these actions will better align resources while preserving the critical skills needed to protect our competitive advantage as we remain laser-focused on implementing our EV product offensive,” the statement said.
CEO Carlos Tavares has mentioned several times that electric cars cost 40% more to make compared to gasoline cars. He says the company needs to cut costs to make electric cars cheaper for regular people. Tavares has also said that the company is always looking for ways to be more efficient.
In the United States, sales of electric cars went up by 47% last year to a record 1.19 million. But the growth slowed towards the end of the year, with sales going up by only 34% in December.
Stellantis plans to introduce 18 new electric cars this year, with eight of them being in North America. But Tavares has said that the work is not finished until electric cars cost as much as gasoline cars. He says Chinese car companies can already do this because of lower labor costs.
Last year, Stellantis offered buyout and early retirement packages to about 6,400 nonunion office workers, but it did not say how many took the offers.
In 2022, the company said it would close a factory in Belvidere, Illinois, and lay off 1,350 people to make its manufacturing smaller. But after talks with the United Auto Workers, Stellantis decided to keep the factory open to make electric cars and also add a battery factory in Belvidere.
Stellantis made a net profit of 7.7 billion euros ($8.3 billion) in the last half of last year. That’s less than the 8.8 billion euros it made in the same period a year earlier.
Stellantis is reducing its workforce after other car companies like Ford and General Motors also cut thousands of office jobs because of the switch to electric cars.
In the summer of 2022, Ford let go of about 4,000 full-time and contract workers to save money. CEO Jim Farley said many of Ford’s workers didn’t have the right skills as the company moved from regular engines to electric ones.
Around 5,000 office workers at GM, many in engineering, took early retirement and buyout offers last spring.
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