Last year, the California Air Resources Board approved what it called a "trailblazing" rule that would set that the state on a path to growing the market for zero-emission cars, pickups and SUVs and reducing pollution.
“Once again California is leading the nation and the world with a regulation that sets ambitious but achievable targets for ZEV sales,” board Chair Liane Randolph said in a statement, referring to zero-emission vehicles.
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Several states, including New York, Colorado, Delaware and Washington, have adopted the California standards.
Now, one automaker says the California emission standards are a factor in layoffs that have affected more than 3,000 workers.
Stellantis (STLA) -), owner of such brands as Chrysler, Citroën, Dodge, Fiat, Jeep, and Maserati, said it planned to temporarily cut a shift at one of its Jeep plants in Detroit and make other changes at a Jeep plant in Toledo, Ohio. The move, the automaker said, will lead to job losses, the Detroit Free Press reported.
Jeep sales have been faltering
The company said it made the move "in part because of the need to manage sales of the vehicles they produce to comply with California emissions regulations that are measured on a state-by-state basis."
Stellantis has been limiting shipments of gasoline-powered vehicles to dealers in states that have adopted California's emissions rules. In some cases gas-powered vehicles were shipped to those states only for sold orders, once customers ordered such vehicles, Reuters reported.
The company indicated that 2,455 workers may be affected at the Detroit plant where it makes the Jeep Grand Cherokee, as well as an additional 1,225 workers at a plant in Toledo that produces the Jeep Wrangler and Gladiator, the Free Press reported.
To curb production due to lagging sales of the Jeep brand, Stellantis plans to shift from an alternative work schedule to a traditional two-shift operation at the Toledo plant, and cut one of its three shifts at the Detroit plant, which employs 4,600 people.
The job losses will be in effect as early as Feb. 5.
Jeep sold more than 973,200 vehicles in 2018, the brand's best year on record. But sales have faltered since, with the iconic brand selling 684,600 vehicles in 2022, a nearly 30% decrease.
In July, Stellantis Chief Executive Carlos Tavares said the brand slipped recently with ineffective marketing tactics and didn’t always have the right versions of popular models available at dealerships, the Wall Street Journal reported.
The company intends to gain back market share in the coming year, he added.
“It is not rocket science,” Tavares said. “We just have to do it properly.”
Rep: layoffs should be 'last resort'
The news of layoffs at the Jeep plants comes less than three weeks after Stellantis's UAW-represented employees voted to ratify a new contract that included wage increases, the return of cost-of-living allowance adjustments and other gains.
Stellantis said that it was looking to void a 2019 California emissions deal with rival automakers, and it might face new compliance penalties from state regulators.
The automaker said it was petitioning to overturn the agreement with the California board to "relieve Stellantis of the competitive disadvantages arising from our continuing exclusion and to preserve our ability to best serve our customers by fairly allocating our products to all states."
Ford (F) -), Honda (HMC) -), Volkswagen (VWAGY) -) and BMW (BMWYY) -) struck a voluntary agreement with California on reducing vehicle emissions, and Volvo Cars, owned by China's Geely, joined soon afterward. Stellantis had sought to join but had been rebuffed.
The California Air Resources Board did not immediately respond to a request for comment.
Michigan House Speaker Joe Tate said the layoffs were "concerning."
“There is ample opportunity in this state for Michigan workers to thrive and manufacturers to succeed in continuing to build world-class products as the auto industry evolves," Tate said in a statement posted on Twitter. “Layoffs should be a decision of last resort and I encourage Stellantis to revisit reducing the number of shifts at Mack Assembly Plant.”
Tavares recently spoke about the future of electric vehicles, saying the legacy automakers were best positioned to fund the sector "because basically, we are doing very good money with the legacy business."
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