An electric Jeep Wrangler is on display on the showroom floor at the Dan O'Brien Auto Group dealership, Monday, Feb. 27, 2023, in Methuen, Mass. (AP Photo/Charles Krupa)
By Keith Laing and Gabrielle Coppola | Bloomberg
Stellantis NV is scrapping a shift at a Jeep plant in Detroit and cutting jobs at the Jeep assembly plant in Toledo, Ohio, a move the company blamed on stricter emissions standards adopted by California and more than a dozen other states in 2019.
Stellantis announced Thursday that it will temporarily cut a shift at its Mack Avenue plant in Detroit, which builds two- and three-row Jeep Grand Cherokee sport utility vehicles and hybrids, as well as a trim operation in Toledo, which makes the Wrangler SUV and Jeep Gladiator pickup. .
Stellantis said it is reducing Jeep production in anticipation of possibly lower sales of natural gas vehicles in California and other states. The company filed against California regulators on Wednesday, arguing that the state's rules put the company at a disadvantage against competitors.
The moves come as automakers push back against the Biden administration's efforts to increase fuel economy and spur faster adoption of electric vehicles. Auto industry trade groups have said the tougher rules will cost them billions in fines, while dealers warn that EV demand is falling.
Stellanti's predecessor, Fiat Chrysler Automobiles NV, has sided with the Trump administration fighting to remove California's legal right to set its own emissions standards. That position resulted in him being left out of the less stringent agreement the California Air Resources Board, or CARB, struck with four automakers — Ford Motor Co., Volkswagen AG, Honda Motor Co. and BMW AG.
Notices of dismissal
Stellandis said he would file notices Thursday with state and local governments under the federal WARN Act, which requires employers with 100 or more workers to give 60 days' notice of plant closings or mass layoffs. The company declined to specify how many jobs would be affected. the two plants together employ just over 10,000 people.
Stellantis' report Wednesday alleged that California wrongly adopted a 2019 agreement negotiated by state regulators and four automakers that allowed those manufacturers to voluntarily increase the average fuel economy of their fleets to about 50 miles per gallon ( 80 kilometers) until the end of the 2026 model year.
While Stellantis has lagged behind other automakers in converting to electric, the Jeep Wrangler 4xe hybrid is the fourth best-selling electric vehicle in California this year through September, and the Chrysler Pacifica hybrid is 13th on the list.
At the same time, all three major Detroit automakers are scrambling to cut costs after agreeing to contracts with record wage increases following United Auto Workers strikes this year.
Lys Mendez, director of communications for CARB, said the agency expects the California Office of Administrative Law to recognize the agreements with the automakers “for what they are” and dismiss Stelantis' petition. The UAW did not immediately respond to a request for comment.
Falling sales
Stellantis is also grappling with shrinking sales of its award-winning Jeep brand as high interest rates put its premium SUV out of reach for more consumers.
Sales of the Jeep brand fell 4 percent in the third quarter, the ninth straight quarterly decline, Stellantis reported in October. Sales fell 9% this year through September. Jeep named a new North American chief and selected a new global brand chief last month.
The 2019 emissions agreement between California and the four automakers is widely seen as a template for a later Biden administration rule approved in 2022. That rule now requires automakers to increase their average fuel economy to about 49 miles per gallon until 2026.
Although the national rules will require roughly the same fuel economy as the California standards, Stellantis says manufacturers in the 2019 agreement can meet the standards based on their national sales, while exempt automakers are measured by sales in states that follow California rules. That, a company spokesman said, necessitated the moves announced Thursday.
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