The race for electric vehicles is expensive for automakers.
For legacy automakers, this often means adapting their factories and employees to a new culture if they want to compete with the upstarts which are disrupting the automotive industry.
These startups have streamlined decision-making processes and rely heavily on technological innovations which turn the vehicle into a tech gadget. They have also introduced new ways to develop the car like Tesla's (TSLA), now famous for its over-the-air strategy.
Over-the-air consists of regularly updating software in vehicles with new features and functionality. When there is an update, vehicle owners are notified and given instructions on how to do it themselves. This allows the vehicle to be always up-to-date with the latest innovations and provides the car manufacturer a steady source of income through a subscription for the service.
Employee Buyouts
The system is also effective with regard to the defects and recalls. A simple update is enough to fix an issue. This avoids physical recalls of vehicles which are particularly costly for manufacturers and disruptive for their customers.
If their experience in mass production is a great advantage, the legacy carmakers try to gain flexibility by giving more latitude to the teams working on their electric vehicle businesses.
Ford has even gone so far as to separate its gasoline car operations, or ICE, from those of battery electric vehicles, or BEV, in order to better compete with the disrupters.
Though Stellantis (STLA) has not gone that far, the parent company of the iconic Jeep and Chrysler brands, however, wants to make room for electric vehicles and the development of the software which powers them.
The company plans to cut jobs through voluntary departures, as part of a plan aimed at reducing its workforce to focus on the activities of electric vehicles. The plan targets senior employees. Stellantis has just offered buyouts to its U.S. salaried employees.
These "voluntary packages" were made to employees who are age 55 or older and have been with the company for at least 10 years, and to employees who have 30 years of service. Employees over 55 years don’t have to be eligible for a pension, while employees who have 30 years of service must have a pension.
The company has 13,000 U.S. salaried employees.
Interested employees have until Dec. 5 to respond.
"As part of our transformation to become a sustainable tech mobility company and the market leader in low-emission vehicles, we offered certain salaried U.S. employees the option to voluntarily separate from the company with a favorable package of benefits that otherwise would not be available to them," a Stellantis spokesperson told TheStreet in an email statement.
Ford Also Cutting Jobs
The spokesperson declined to give further details. She did not, for example, disclose how many people were offered the option to leave.
This is the second time Stellantis has offered employee buyouts. The company made a similar decision to pension-eligible U.S. salaried employees in November 2021. The employees who were offered the packages were already eligible to retire.
Stellantis, which was born from the merger of the French group PSA and the Italian-American group Fiat Chrysler, is not the only legacy carmaker to cut jobs.
Last August, Ford (F) said in a memo to employees that it will eliminate up to 3,000 jobs, effective Sept. 1, with the bulk of the reductions coming from salaried employees in the U.S. and Canada.
GM (GM), the other member of Detroit's Big Three, has yet to announce job cuts, but the group has slowed its pace of hiring as part of a general plan to better control costs.
"We're already taking proactive steps to manage costs and cash flows, including reducing some discretionary spending and limiting hiring to critical needs and positions that support growth," Paul Jacobson, executive vice president and chief financial officer, told analysts during the third quarter earnings' call on Oct. 25.
