According to media reports, Stellantis, the world's third largest auto manufacturer, announced on Friday plans to close and sell its large vehicle testing site located in Arizona, USA by the end of this year.

This decision is one of the latest cost-cutting measures taken by the company's CEO Carlos Tavares. Analysts believe that Tavares faces increasing pressure from Wall Street, dealers, and the United Auto Workers union (UAW) amid poor financial performance, layoffs, and overall business decisions.

Stellantis confirmed the closure news on Friday morning and mentioned the cost-cutting and real estate evaluations the company is undergoing.

"The company continues to seek opportunities to improve efficiency and optimize its business layout to ensure future competitiveness in today's rapidly changing global market."

Stellantis also stated that the company is "working with the UAW to provide special compensation packages for the testing site employees, or they can choose to continue working at new operational sites."

The Arizona testing site covers 4,000 acres. Since Chrysler purchased the facility from Ford Motor Company for $35 million in 2007, it has been used for automotive testing and development. According to Stellantis data, as of July 2019, the site employed 69 staff, including workers represented by the local UAW chapter.

At the same time, according to two sources familiar with this decision, Stellantis plans to use Toyota Motor's testing site in Arizona starting from next year. Toyota opened its expensive testing facility for use by other companies in 2021.

Most auto manufacturers, including Stellantis, have multiple test sites in different climates and geographic locations to develop and test vehicles before they go on sale. Another major test facility for Stellantis in the USA is located in Chelsea, west of Detroit, Michigan, spanning 4,000 acres.

According to reports, during contract negotiations with the UAW last year, Stellantis' comprehensive test facility in Arizona was one of 18 facilities that the company informed the union could be closed.

The company is expected to consolidate most of its other major operational facilities, including the vast Detroit campus that used to be Chrysler's global headquarters, into a "super site." The status of other properties is unclear, although political figures like Michigan Governor Gretchen Whitmer have expressed concerns about the potential closure of Stellantis' headquarters in Michigan.

Data shows that in recent years, with Tavares' cost-cutting measures, Stellantis has significantly reduced its workforce in the USA.

According to public records, Stellantis reduced its workforce by 15.5%, about 47,500 employees, from December 2019 to the end of 2023, with a 14.5% reduction in the North American region. This does not include further layoffs this year.

As of the end of last year, Stellantis had only about 11,000 white-collar employees in the USA, compared to 53,000 at General Motors and 28,000 at Ford Motor.

Sources informed the media that Stellantis is attempting to outsource much of its engineering work to low-cost countries like Brazil, India, and Mexico, where employee costs are approximately €50,000 (about $53,000) per year or lower, significantly lower than similar positions in the USA and Europe. Earlier reports indicated that Stellantis has started recruiting the majority of engineers in these countries, with employee costs far below those in the USA and Europe for similar positions.