The maker of Jeep SUVs, Ram pickup trucks and other vehicles will invest a total of $155 million in three plants in Kokomo, Indiana, to produce electric drive modules for battery electric vehicles in North America.
CEO Carlos Tavares announced the investment on Tuesday morning during CNBC's "Squawk Box." The EDMs include the electric motor, power electronics and transmission. Workers in Kokomo will combine them into a single package that Stellantis says improves performance, vehicle cost and range up to 500 miles. These EDMs will support the STLA (pronounced "Stella") Large and STLA Frame vehicle platforms that will underpin electric Jeep SUVs, Dodge muscle cars and the Ram 1500 REV truck.
"By combining the benefits of the EDM with our new BEV-centric platforms and innovative battery technologies," Tavares said in a statement, "we will offer our customers a variety of electric vehicles with unparalleled performance and range at more affordable prices. And with our in-house manufacturing capabilities and expertise, we will do it with greater flexibility and efficiency."
The move is one part of a trend toward vertical integration of EV components, a reversal of course from what had been seen in the latter half of the last century. EVs have fewer parts. More control of them gives automakers more power to differentiate their models from the competition as well as control quality and help find the cost savings Tavares has warned are needed to keep pricier EVs affordable for middle-class buyers.
The gearbox cover will be cast at Kokomo Casting and machined at Kokomo Transmission. Gear machining and final assembly will be at the Indiana Transmission Plant. Following retooling, production is expected to start in the third quarter of 2024.
The investment will retain more than 265 jobs across all three plants. Stellantis employs more than 7,000 people in Kokomo at powertrain components plants. The automaker is building a new battery manufacturing plant there with Korea's Samsung SDI. It aims for 50% EV sales by 2030 in the United States with 25 models.
Since 2020, Stellantis has invested nearly $3.3 billion in Indiana to support its transition to electrification. This includes recent announcements of $643 million to produce a new engine for conventional and plug-in hybrid vehicle applications, a next-generation eight-speed transmission and the battery plant.
"These investments will leverage the core manufacturing competencies of the local workforce in the areas of casting, machining and assembly, all of which will be needed even as the market transitions to an electrified future," Mark Stewart, Stellantis' chief operating officer in North America, said in a statement. "The city of Kokomo and the state of Indiana have been great partners for many years. This community will continue to play a central role in our efforts to provide safe, clean and affordable mobility solutions for our customers long into the future."
The announcement, meanwhile, came as uncertainty hangs over Stellantis workers in Belvidere, Illinois. The Jeep Cherokee crossover plant will idle starting Tuesday without production allocated. The automaker has said it's evaluating other uses for the plant, which will be a priority for the United Auto Workers if no solution is found prior to the parties meeting at the bargaining table this summer.
The UAW in a statement took aim at Tavares' $24.8 million 2022 compensation package and emphasized work to obtain early retirement benefits and transfer opportunities for affected employees.
"Stellantis' ill-advised decision will have negative repercussions throughout the region and supplier network," President Ray Curry said in a statement. "It will disrupt lives, uproot families, and leave communities struggling to find economic drivers to pay for schools, roads and other services."
