Stellantis, one of the major U.S. automakers, is offering voluntary buyouts to about 60% of its American workforce, marking the latest step in its cost-cutting strategy as the industry shifts toward electric vehicles (EVs). The company announced that approximately 33,000 U.S. workers, including both hourly and salaried employees, will receive the offers next week, alongside 8,000 Canadian employees. The move comes as Stellantis aims to manage rising costs associated with electrification, including expensive factory retooling and new EV production centers.
The buyout offers reflect Stellantis’ ongoing efforts to streamline operations and prepare for an electric future. CEO Carlos Tavares has previously highlighted the financial strain of producing electric vehicles, which are about 40% more expensive to manufacture than traditional gas-powered cars. This, combined with significant upfront investments in EV battery plants and new production facilities, has driven the automaker to seek ways to improve efficiency and cut costs.
As part of these efforts, Stellantis is focusing on protecting the competitiveness of its products while reducing operational expenses. “We are thoroughly reviewing our North American operations to enhance efficiency and reduce costs,” the company said in a statement. “These savings will allow for further strategic investments to support our transformation.”
The automotive industry’s shift toward electric vehicles has prompted similar moves by other automakers. Earlier this year, General Motors (GM) offered voluntary buyouts to most of its 35,000 salaried employees, resulting in 5,000 acceptances. Ford also trimmed its workforce by 3,000 employees in 2022. These job cuts reflect a broader trend as companies grapple with the financial challenges of the EV transition, aiming to balance the costs of innovation with profitability.
Stellantis’ buyout offer targets a specific goal: Bloomberg reported that the company hopes to reduce its headcount by 3,500 hourly workers in the U.S. Details on the buyout packages will be provided to eligible employees next week, according to Stellantis spokesperson Jodi Tinson.
Stellantis, headquartered in Auburn Hills, Michigan, operates several manufacturing facilities across North America, including factories in Michigan, Ontario, and Ohio. Despite its recent workforce reductions, the company is pushing forward with plans to expand its EV capabilities. Earlier this year, Stellantis announced a $2.5 billion investment to build a new EV battery factory in Kokomo, Indiana, in partnership with Samsung SDI. This facility is part of the company’s goal to have 50% of its global sales come from electric vehicles by 2030.
Stellantis is not alone in this ambition; many automakers are betting on EVs as the future of the industry. However, the transition has not been easy, with companies facing high production costs, complex supply chains, and intense competition. Still, Stellantis remains committed to its electrification strategy, viewing it as a key pillar for long-term sustainability and growth.
The United Auto Workers (UAW) union has been vocal about its disapproval of Stellantis’ decision to cut jobs, especially as the company reported $17.9 billion in profits in 2022. UAW President Shawn Fain condemned the move, stating, “Stellantis’ push to cut thousands of jobs while raking in billions in profits is disgusting. This is a slap in the face to our members, their families, their communities, and the American people who saved this company 15 years ago.”
The UAW’s statement underscores the tension between automakers’ financial goals and labor interests, a conflict that may continue as the industry transforms. While Stellantis argues that cost-cutting is essential to ensure the company’s future in a rapidly changing market, union representatives are pushing for greater job security and fairness for workers.
With plans to offer buyouts to a significant portion of its workforce, Stellantis is positioning itself for a leaner, more agile future as it navigates the challenges of electrification. The automaker’s cost-cutting measures are part of a broader effort to invest in strategic areas while maintaining competitiveness in an evolving market.
Despite the difficulties, Stellantis is optimistic about its electric vehicle initiatives, aiming to build infrastructure and produce more EVs that meet consumer demands at competitive prices. However, the success of these plans will depend on the company’s ability to balance cost-efficiency with innovation, all while managing the concerns of its workforce and stakeholders.
