FCA Investing $4.5 Billion in Plants, Jobs, Electric Jeeps

February 26, 2019 by Alan Adler, @AlanAdler

Fiat Chrysler Automobiles plans two new Jeep models that may include full electrification, as well as the return of the storied Jeep Wagoneer and Grand Wagoneer, as part of a $4.5 billion investment that includes converting a partially idled engine complex to the first assembly plant in Detroit in three decades.

FCA did not provide details of the new Jeeps, calling them “white space” products in key market segments. Jeep does not sell any hybrid or electric versions of its off-road models, including the new Gladiator midsize pickup truck that goes on sale in the second quarter of this year.

FCA’s investment would allow production of “at least four plug-in hybrid vehicles and the flexibility to produce fully battery-electric vehicles,” said Mike Manley, FCA chief executive.

“This may mean using electrification to improve slow-crawl models to offer more than simple fuel economy and tag on to the electrification trend,” said Stephanie Brinley, an auto industry analyst with IHS Markit.

Plug-in hybrid Pacifica

The Chrysler brand sells the Pacifica minivan as a plug-in hybrid. Waymo, Google’s autonomous-vehicle unit, announced last May that it was purchasing 62,500 Pacificas for driverless conversion.

“Electrification at some level is expected to be necessary to meet future fuel-economy and emissions standards in several markets,” Brinley said. “FCA does not need to have offered the technology earlier than necessary to ultimately be successful.”

Key investments announced Tuesday include:

  • $1.6 billion to convert the Mack Avenue Engine Complex in Detroit to manufacture the next-generation Jeep Grand Cherokee and an all-new, three-row, full-size Jeep SUV. The conversion would create 3,850 new jobs. It would be the first new assembly plant in the city since Chrysler opened its Jefferson North facility in 1992.
  • $900 million at Jefferson North to modernize the plant for continued production of Dodge Durango and the next-generation Jeep Grand Cherokee. The makeover would add 1,100 new jobs.
  • $1.5 billion at the Warren, Mich., truck plant to produce all-new Jeep Wagoneer and Grand Wagoneer models and to continue assembly of the Ram 1500 Classic. The moves would create 1,400 new jobs.

Some work on the plant conversion could begin this spring, FCA said. The projects are contingent on acquiring land and negotiating development incentives with Detroit and the Michigan cities of Sterling Heights, Warren and Dundee. Each has an FCA plant that would be affected by the deal.

2016 expansion

As part of a U.S. plan in 2016, FCA discontinued compact car production and retooled plants in Illinois, Ohio and Michigan to expand the Jeep and Ram brands.

“Three years ago, FCA set a course to grow our profitability based on the strength of the Jeep and Ram brands by realigning our U.S. manufacturing operations,” Manley said. “Today’s announcement represents the next step in that strategy.”

The strategy is sound as long as the desire for trucks is strong, said Ed Kim, an analyst with AutoPacific.

“Ensuring that there are options to ensure good fuel economy through electrification is a very necessary move,” he said.

Read Next: L.A. Auto Show: 2020 Jeep Gladiator Joins Midsize Pickup Crowd

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