(Bloomberg) -- The head of Stellantis NV’s Ram pickup brand said the automaker is open to revising a planned push into lower-cost countries, including Mexico, should President-elect Donald Trump impose new tariffs on the sector.
The company is exploring possible changes to its factory and supplier networks that could be employed if policies implemented by the incoming administration disrupt supply chains, said Chris Feuell, who took charge of Ram brand in June. She said the lessons learned during the pandemic about finding new suppliers and redesigning parts could come in handy during the next administration.
“It’s obviously part of all the scenario planning we’re doing,” she said in an interview at the Los Angeles Auto Show on Thursday, noting that no decisions have been made. One question they’re addressing is: “How do we need to think about manufacturing and sourcing strategies given where tariffs or the administrative decisions could go?”
Trump has repeatedly vowed to slap levies of 60% on goods from China and 20% on imports from the rest of the world. The moves risk hitting the auto industry especially hard because it relies on thousands of parts that can cross multiple borders before they’re installed in a car during final assembly.
Mexico Plant
Trump has also threatened to punish carmakers importing vehicles to the US from Mexico, where Stellantis is expanding a pickup truck plant in Saltillo to produce some Ram 1500 trucks next year. It’s part of a plan to move more of its manufacturing footprint to lower-cost countries than the US. The plant also makes heavy-duty Ram trucks and commercial vans.
The move angered the United Auto Workers Union, whose members have suffered layoffs as Stellantis cuts costs after a sharp drop in profit in the first half of 2024. The company is laying off 1,100 workers at its Warren, Michigan truck plant, which made an older version of the Ram 1500 pickup.
Stellantis is working down excess inventories while contending with pressure from high interest rates and the complex launch of multiple new electric vehicles. The challenges have fueled job and production cuts affecting the Ram and Jeep brands in the US. Sales for Ram — one of the carmaker’s main sources of profit in the US — were down 24% through the first nine months of the year.
Ram is also working to clear inventory ahead of two new truck launches that were pushed from late this year to mid-2025: an all-electric Ram EV, and the Ramcharger, a battery-powered pickup with an on-board gas generator to boost range and towing capacity.
EV Risks
In the near term, losing a $7,500 consumer tax credit for electric vehicle purchases would be an even bigger risk. EVs are already costly and losing the purchase credit would hurt adoption, Feuell said. Trump’s transition group has discussed scrapping the $7,500 subsidy as part of a broader tax-reform effort, Reuters reported last week, citing unidentified sources with direct knowledge of the matter.
Stellantis has the ability to make gas, hybrid and fully electric trucks. Right now, the company has no immediate plans to change plans for what’s under the hood of its vehicles, Feuell said.
“It’s important to stay true to our strategy,” she said. “If we need to pivot with regard to the mix that those products represent, then that is certainly an option for us to take a look at.”
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