Stellantis Considers Retreating from Mexico Amid Trump Tariff Threat
Stellantis Considers Retreating from Mexico Amid Trump Tariff Threat
Chris Feuell, president of the Ram brand at Stellantis NV, said the automotive giant is open to revisiting its plans for lower-cost countries like Mexico in the face of Donald Trump's threat to impose new tariffs on the sector following his presidential election victory. Since taking charge of Ram in June 2024, Feuell has been evaluating potential changes to the company's factory and supplier networks. He noted that pandemic-era experience in finding suppliers and redesigning parts could prove valuable should new administration policies disrupt supply chains.
\nSpeaking at the Los Angeles Auto Show on November 21, 2024, Feuell said no final decisions have been made and that scenario planning is considering "how we need to think about production and supply strategies taking into account where tariffs or administrative decisions might go." Trump has pledged to impose 60% tariffs on goods from China and 20% on other imports worldwide. These moves pose particular risk to the automotive industry, which relies on thousands of parts crossing multiple borders during final assembly before being integrated into vehicles.
\nAs Stellantis expands a new pickup truck factory in Saltillo where Ram 1500 trucks will be produced, Trump's threat to penalize automakers importing vehicles from Mexico into the U.S. is also weighing on the company. The move is part of a plan to shift manufacturing footprint from the U.S. to lower-cost countries. The facility also produces heavy-duty Ram trucks and commercial vans. This initiative angered the United Auto Workers Union following Stellantis' sharp profit decline in the first half of 2024, prompting layoffs aimed at reducing costs. The company is cutting 1,100 workers at its truck plant in Warren, Michigan, which produces an older Ram 1500 model.
\nAs Stellantis grapples with high interest rates and the complex launch of multiple new electric vehicles, it is working to reduce excess inventory. These challenges have triggered business disruptions and production shortfalls affecting Ram and Jeep brands in the U.S. Ram sales declined 24% in the first nine months of 2024. Ram is also clearing inventory ahead of two new truck launches delayed from late this year to mid-2025: a fully electric Ram EV and the Ramcharger, which uses an onboard gas generator to extend range and towing capacity.
\nIn the near term, the loss of a $7,500 consumer tax credit for electric vehicle purchases poses a greater risk. With electric vehicles already expensive, losing the purchase credit will make adoption more difficult. Feuell noted that Trump's transition team has discussed eliminating the $7,500 subsidy as part of broader tax reform efforts. Stellantis has the capability to produce gasoline, hybrid, and fully electric trucks. Currently, the company has no urgent plan to change its vehicle powertrains. "It's important we stay true to our strategy," Feuell said. "If we need to pivot on the mix that the products represent, that's certainly an option we can consider."
\nKey Takeaways:
\nStellantis NV: Ram brand president Chris Feuell is prepared to review production and supply strategies in response to Trump's tariffs.
Trump Tariffs: The threat of 60% import duties on China and 20% on other countries could severely impact the automotive sector.
Mexico Factory: The new facility in Saltillo produces Ram 1500 trucks along with heavy-duty trucks and commercial vans.
Layoffs: 1,100 workers are being cut at the Warren facility in Michigan.
Inventory and Sales: Ram sales fell 24% in the first nine months of 2024, with efforts underway to reduce excess inventory.
New Models: The electric Ram EV and Ramcharger launches have been postponed to mid-2025.
Tax Credit: Loss of the $7,500 EV consumer tax credit could hinder electric vehicle adoption.
Strategic Flexibility: Stellantis aims to remain flexible in producing gasoline, hybrid, and electric trucks.
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