Electric trucks, a factory launch and a massive merger: Illinois auto industry travels new roads in 2020

From electric trucks and startups to international mega mergers, the state of the fast-evolving auto industry in Illinois comes down to a tale of three cities: Normal, Belvidere and Chicago.

Plants in all three cities will be building SUVS by far the largest segment of auto sales but their paths forward will be shaped by radically different forces.

In downstate Normal, a hibernating auto town is eagerly awaiting the rebirth of a long-dormant plant, as electric truck startup Rivian flips the switch and begins production of its inaugural models. Still reeling from the loss of a third shift, the Fiat Chrysler plant in Belvidere now faces a massive merger with Peugeot. And fresh off a $1 billion renovation, Ford’s Chicago assembly plant is at full speed heading into 2020.

But a future that includes everything from electric and self-driving vehicles to assembly lines increasingly staffed by robots could portend more challenges for Illinois auto plants and their workers down the road.

Adding to the uncertainty, new car sales are projected to decline 1.2% to 16.8 million vehicles in 2020, according to the annual forecast released last month by the National Automobile Dealers Association. That would mark the first time annual new vehicle sales dip below 17 million units in five years.

“Most of the pent-up demand for new vehicles has been met,” said Patrick Manzi, senior economist for the dealers association.

“That shift is permanent,” Manzi said.

Rivian, Normal, Ill.

Current products: Electric truck and SUV models set to begin production in late 2020

Startup electric truck manufacturer Rivian received a big boost as it heads into its first year of production, closing on a $1.3 billion round of funding late last month, including new investments from Ford and Amazon.

By all indications, auto manufacturing is indeed returning to Normal, a central Illinois city that used to build Mitsubishi sedans and SUVS.

The rubber will presumably meet the road in late 2020, as the first vehicles a high-performance electric truck and SUV are expected to roll off the line at a former Mitsubishi plant being retooled on the outskirts of town.

“When you see what’s in this facility, I think the scale of what we’re doing is going to become more clear to a lot of people,” said Scaringe, 36.

Founded 10 years ago, Plymouth, Michigan-based Rivian is gaining momentum in its mission to become the Tesla of trucks, drawing more than $2.8 billion in investments last year from Ford, Cox Automotive and Amazon, among others. In September, Rivian announced it will build 100,000 custom electric delivery vehicles for Amazon alongside its consumer-focused truck and SUV.

Rivian will begin delivering Amazon vans in 2021, the company said.

“All the right signals are happening,” Scaringe said. “We have a lot of interest in electrification, both from a regulatory point of view and overall public policy point of view, but you also see in terms of consumer demand, consumers are beginning to really start to see the benefit of an electric drive train.”

Rivian’s R1T pickup and R1S SUV will be able to go from zero to 60 mph in about three seconds and travel up to 400 miles on a single charge, according to the company.

While optimism is running high in Normal ahead of Rivian’s launch, skepticism remains over how quickly demand for its $69,000 base model truck and electric vehicles in general will grow. In 2019, electric vehicles accounted for about 1.4% of 17.1 million new cars and light trucks sold in the U.S., according to dealer association economist Manzi.

“I don’t think it’s going to be a monumental shift,” Manzi said. “I think it’s going to be gradual over the course of the next decade.”

Ford’s Chicago Assembly Plant

Current products: Ford Explorer, Lincoln Aviator and Police Interceptor SUVS

In March, Ford spent $1 billion and shut down its Torrence Avenue plant on the Southeast Side for a month, transforming the nearly century-old facility with a host of new amenities for workers, and an army of new robots to help them build vehicles.

The automaker’s oldest plant in continuous operation enters the new year hitting on all cylinders, with 5,700 hourly employees working three shifts to churn out the new 2020 Ford Explorer, Lincoln Aviator and Police Interceptor SUVS. The Chicago Assembly Plant, which made the Model T when it opened in 1924, phased out production of the Taurus sedan last year to focus exclusively on building all-new SUVS.

“They’re working like crazy,” Ford spokeswoman Kelli Felker said. “We are at full production right now and have been for a while.”

Ford was on track to sell more than 2.4 million vehicles in the U.S. in 2019, down about 3% for the year, according to automotive research firm Edmunds.

While the new lineup of SUVS being built in Chicago is on trend with the industry’s move away from sedans, productivity will nonetheless be directly tied to how well they sell in 2020, Felker said.

“We always are building to customer demand,” Felker said. “So assuming that the demand is there, we expect to be building a lot at Chicago Assembly.”

Fiat Chrysler’s Belvidere Assembly Plant

Current product: Jeep Cherokee …For 55 years, tiny Belvidere has been an auto town about 75 miles northwest of Chicago.

That legacy took another blow in May when Fiat Chrysler Automobiles eliminated the third shift at the Belvidere Assembly Plant near Rockford, leaving the nearly 1,400 members of “C Crew” out of a job because of slowing demand for the plant’s only product the Jeep Cherokee.

Now the town and the automaker’s remaining 4,000 workers face new uncertainty in the wake of the proposed merger of Fiat Chrysler and Peugeot, which agreed to terms on Dec. 18, forming what will be the world’s 4th largest automaker with annual sales of 8.7 million vehicles. The deal is expected to close in early 2021.

The Belvidere plant opened in 1965, building a range of vehicles from the Chrysler New Yorker to the Dodge Neon. During Chrysler’s bankruptcy in 2009, the plant was down to 200 employees before Fiat and a government bailout rescued it and the company.

As part of the four-year UAW contract ratified in December, Fiat Chrysler agreed to invest $55 million in the Belvidere plant, to keep building the current Jeep Cherokee and to build “fresh models” off the Jeep Cherokee platform.

But there will be a new owner. Fiat Chrysler and Peugeot of France, a venerable European powerhouse signed a binding merger agreement on Dec. 18 that will create a massive global automaker and a new corporate parent for the Belvidere plant. The deal, which is expected to close in 12 to 15 months, is projected to generate $4 billion in annual cost-savings.

During a conference call announcing the merger, Peugeot CEO Carlos Tavares, who will serve in the same role with the combined company, may have allayed some short-term fears about the future in Belvidere and beyond.

“The synergies of costs will not come from any plant closures resulting from the transaction,” Tavares said.