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Stellantis CEO Dangles Potential Factory Relaunch

The news comes as autoworkers say a strike is possible.

CEO of PSA Groupe Carlos Tavares arrives for the presentation of the company's 2019 full year results in Rueil-Malmaison, west of Paris, Feb. 26, 2020
CEO of PSA Groupe Carlos Tavares arrives for the presentation of the company's 2019 full year results in Rueil-Malmaison, west of Paris, Feb. 26, 2020
AP Photo/Michel Euler, File

MILAN (AP) — Stellantis CEO Carlos Tavares on Wednesday dangled a potential relaunch of a shuttered Illinois factory if it can be made more competitive as the United Auto Workers Union says a strike is possible.

UAW President Shawn Fain is looking for major gains, including cost-of-living pay increases, in talks with Stellantis — along with Ford and General Motors — and has warned that workers at all three automakers could walk off the job. Fain's campaign to become UAW's president leveraged the fate of the Jeep assembly plant in Belvidere, Illinois, whose 1,350 workers were laid off.

Tavares told reporters during an earnings conference call that the Belvidere factory, which was shut down indefinitely in the spring, could get a new production line depending on factors like the success of Stellantis' launch of fully electric vehicles in the U.S.

"So far the decision is not made," Tavares said, adding that progress in the union talks could determine Belvidere's future. "We will wait to see if we are able to use these negotiations to make sure that we fix all the competitive opportunities we have."

He added that "the question is if we create conditions for that plant to be competitive in the midterm. We need to protect the value creation of our business in the U.S."

The UAW leader has made clear that the union is preparing to strike against Detroit automakers if no deal is reached before contracts for some 150,000 workers expire on Sept. 14.

Tavares told reporters that he viewed the strike threat as a normal part of the union's negotiating tactics, and didn't appear particularly worried.

"It is not in our DNA to plan for strikes," Tavares said, adding that the carmaker has not faced significant strikes since Stellantis was created in 2021 from a merger of French carmaker PSA Peugeot and the Italian-American conglomerate Fiat Chrysler Automobiles.

Stellantis is starting what Tavares called an "EV offensive" in the United States this year with the Jeep Recon, the Wagoneer and the Dodge Charger.

He said he is aiming for a fully electric vehicle in the $25,000 range to attract middle-class buyers who shy away from the additional costs associated with the technology. Stellantis is absorbing 40% of electric vehicle costs to meet deadlines set by regulators, which are outpacing natural market demand, Tavares said.

In Europe, EV sales are buoyed by subsidies, he noted.

"Right now, if you stop the subsidies on EV sales, the demand collapses. It means right now people would like to enjoy clean mobility, but they don't want to pay for it," he said.

The U.S.-European carmaker on Wednesday reported a 37% boost in earnings in the first half of the year, driven by strong North America income and an increase in electric vehicle sales in Europe.

Profit in the first six months of the year was 10.9 billion euros ($12.07 billion), compared with 7.96 billion euros in the first half of 2022. The carmaker set record net revenue in the first six months of the year of 98.4 billion euros, up 12% over a year earlier. It came as shipments rose to 3.327 million vehicles from 3.033 million.

Tavares called the first-half performance "outstanding," saying that it "supports our long-term stability."

Sales of all-electric vehicles rose by 24% to 169,000 vehicles as Stellantis became the third-largest producer of EVs in Europe, led by the Fiat New 500, Open Mokka and Citroen Berlingo.

Stellantis has 25 electric vehicles on the market and is launching another 23 by the end of next year.

North America accounted for 57% of adjusted operating income and nearly half of company revenue, boosted by higher sales of Chrysler Pacifica, Dodge Charger and Durango.

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