Jeep Halts Production at Illinois Plant Due to High EV Costs, Axes 1,350 Employees

Stellantis will halt operations indefinitely at a Jeep Cherokee plant in Belvidere, Illinois, citing the high costs of developing electric vehicles. The move will leave 1,350 employees out of work, effective Feb. 28.

Stellantis mentioned multiple reasons for closing the plant, including the microchip shortage, but noted that “the most impactful challenge is the increasing cost related to the electrification of the automotive market.”

Electric vehicles are more expensive to produce than gas-powered cars, primarily due to high costs on the minerals in their batteries. Yet, EV sales nearly doubled this year with no signs of slowing, pushing most automakers—including Jeep—to electrify their lineups.

This year, Jeep announced plans(Opens in a new window) to become the “world leader in electric SUVs.” The Jeep Wrangler 4xe plug-in electric hybrid is the most popular PHEV in the US, and Jeep will launch four fully electric SUVs by 2025. The Belvidere plant makes exclusively gas-powered Jeep Cherokee SUVs, sales of which have declined significantly in recent years, Yahoo reports(Opens in a new window). Nearly 70% of the facility’s original workforce had been laid off prior to the shutdown news.

2023 Jeep Grand Cherokee Trailhawk 4xe and 2023 Jeep Wrangler Rubicon 4xe EVs
(Credit: Jeep)

“The company will make every effort to place indefinitely laid off employees in open full-time positions as they become available,” Stellantis says. Illinois Gov. J.B. Pritzker also says his administration will help displaced workers find new positions since the plant is unlikely to re-open.

The United Automotive Workers (UAW) union released a disapproving statement(Opens in a new window) following the Dec. 9 decision, vowing to “fight back” against it. “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,” the UAW says. “The transition to electrification also creates opportunities. Companies like Stellantis receive billions in government incentives to transition to clean energy.”

Stellantis did not comment on the remaining lifespan for the gas-powered Jeep Cherokee. “This is an important vehicle in the lineup, and we remain committed long term to this mid-size SUV segment,” company spokesperson Jodi Tinson tells Reuters(Opens in a new window). Tim Ferguson, chairman for the UAW chapter that represents the plant’s Illinois workers, claims Stellantis company documents show Cherokee production being moved to a facility in Mexico.

The news came on the same day as a UAW victory at a GM electric vehicle battery factory in Ohio, where workers voted overwhelmingly to unionize the plant, making it the first factory built specifically for EV-related parts and components to do so, the Washington Post reports(Opens in a new window).

President Biden tours the General Motors Factory ZERO electric vehicle assembly plant alongside United Auto Workers President Ray Curry in 2021.
(Credit: MANDEL NGAN/AFP/Getty Images)

President Biden has touted electric vehicles as a major source of job creation across industries, including factory work, electrician work to install chargers, and more. He spoke to a crowd of electrical union workers at the Detroit Auto Show this fall when announcing the release of federal funding for a nationwide charging network. Much of it will be built by unionized electricians.

Honda, General Motors, and other major automakers have shifted EV production to the US to qualify their vehicles for the $7,500 federal tax credit, which requires US vehicle assembly. A new battery industry has also spurred a new “battery belt(Opens in a new window)” of factories in the US, generating thousands of jobs. However, the closure of the Jeep Cherokee plant lays bare the growing pains of this transition as automakers shift their resources to new facilities and product lines.