Stellantis to lay off 2450 workers as it replaces Ram trucks with EVs

Written by Wall Street Journal Editorial Board on September 2, 2024. Posted in Current News

Stellantis is showing what the real green-energy transition looks like: On Friday the auto maker announced plans to lay off 2,450 workers in Michigan as it ramps up electric-vehicle production

As consolation, the laid-off workers will receive a generous parting gift.

Car makers are struggling to sell higher-priced cars as consumers pull back after three years of inflation.

At the same time, the rich labor agreement that Stellantis, Ford and GM struck last autumn with the United Auto Workers is raising costs.

The companies need healthy profits from gas-powered trucks to subsidize their money-losing EV production.

Hence Stellantis’s scramble to slash costs. The company last month announced buyouts for salaried workers in the U.S. On Friday it said it will lay off as many as 2,450 production workers in Warren, Mich., where it produces its classic Ram 1500 pickup, as it rolls out a new electric model. Workers can send a thank you card to UAW president Shawn Fain.

Car companies scrap old models all the time as they come out with new ones. But making EVs requires fewer workers than gas-powered cars, and Stellantis is seeking to take advantage of those manufacturing efficiencies.

The problem, and the tragedy for the workers, is that such decisions are being driven by government mandates rather than market choices.

The Environmental Protection Agency’s new emissions rules will effectively require companies to produce one to two electric trucks for every gas-powered truck as soon as 2027 and nearly four to one by 2032.

California’s mandates are even more aggressive and will ban the sale of new gas-powered cars by 2035.

Some 15 states have adopted California’s EV quotas, including Minnesota, where Gov. Tim Walz imposed them over strong opposition from his state’s auto dealers. Kamala Harris also supported banning new gas-powered cars nationwide by 2035 when she ran for President in 2019.

Does she still? Will anyone ask?

Democrats claim their green-energy transition will create millions of jobs, but the evidence so far suggests otherwise. The reality is that government will end up supporting workers who lose their jobs and can’t find other work, which is why Democrats are pushing to expand the welfare state.

Stellantis is offering laid-off workers 52 weeks of unemployment assistance and 52 weeks of “transition assistance” plus two years of health coverage, on top of state unemployment benefits.

That’s generous, but many employers won’t be able to afford such charity.

As government destroys more jobs, taxpayers will inevitably be asked to compensate for the damage.

Header image: Rebecca Cook / Reuters

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