auto stellantis
It took over a year for the Italian-American and French automakers to finalise the $52 billion deal. Image Credit: Supplied

New York: Automaker Stellantis plans to suspend activities at a Jeep-branded factory in the United States, citing difficulties due to the pandemic and rising costs linked to the transition to electric vehicles.

Production at the Belvidere assembly site in Illinois, where Jeep Cherokee SUVs are manufactured, will cease on February 28, the company said Friday in a message sent to AFP.

The approximately 1,350 employees of the factory will be laid off. The company, which is considering other ways to use the site, said it "will make every effort to place indefinitely laid-off employees in open full-time positions as they become available."

Adverse effects

"Our industry has been adversely affected by a multitude of factors like the ongoing COVID-19 pandemic and the global microchip shortage, but the most impactful challenge is the increasing cost related to the electrification of the automotive market," Stellantis said in a statement.

The American union representing the auto sector, UAW, criticised the move.

Products imported from other countries could be manufactured in the factory, while the transition to electric "creates opportunities for new product," said Cindy Estrada, the union leader at Stellantis.

"Companies like Stellantis receive billions in government incentives to transition to clean energy," she said.

"It is an insult to all taxpayers that they are not investing that money back into our communities."