DETROIT — Automaker Stellantis plans to shutter and sell its large vehicle proving grounds in Arizona at the end of this year, CNBC has learned.

The decision is the latest cost-cutting measure by the trans-Atlantic automaker under CEO Carlos Tavares, who has been increasingly under pressure from Wall Street, dealers and the United Auto Workers union amid the company’s lagging financial performance, layoffs and overall business decisions.

The Arizona Proving Grounds covers 4,000 acres between Phoenix and Las Vegas in Yucca, Arizona. It has been used for vehicle testing and development for the automaker since then-Chrysler purchased the property for $35 million from Ford Motor in 2007.

The closure was confirmed by three people familiar with the plans who agreed to speak on the condition of anonymity because the matters are private.

Stellantis plans to use a proving grounds in Arizona owned by Toyota Motor beginning next year, according to two people familiar with the decision. Toyota opened its operations, which are costly to maintain, for other companies to use in 2021.

Stellantis confirmed the closure Friday morning, citing the company’s ongoing cost-cutting and real estate evaluations.

“Stellantis continues to look for opportunities to improve efficiency and optimize its footprint to ensure future competitiveness in today’s rapidly changing global market,” the company said in an emailed statement.

The automaker also said it is “working with the UAW to offer proving ground employees special packages or they can choose to follow their work in a transfer of operations” but that employees could be placed on an “indefinite layoff, which would entitle them to pay and benefits for two years.”

Stellantis said 41 employees currently work at the Arizona Proving Grounds, including 37 hourly workers represented by a local chapter of the UAW.

The UAW, which has been increasingly critical of Tavares and such layoffs, did not respond for comment on the planned closure.

Stellantis, like most automakers, has several proving grounds in different climates and geographies to develop and test vehicles ahead of selling them to consumers. Stellantis’ other major U.S. proving grounds facility is a 4,000-acre campus located west of Detroit in Chelsea, Michigan.

Stellantis’ complex in Arizona was one of 18 facilities the company notified the UAW it could potentially close during the union’s contract negotiations last year with Stellantis.

A majority of the other operations were parts and distribution centers that were expected to be consolidated into “mega sites,” as well as the company’s massive 500-acre campus in metro Detroit formerly used as Chrysler’s world headquarters.

The status of the other properties was not immediately clear, however, local and state politicians, including Michigan Gov. Gretchen Whitmer, have expressed concerns that Stellantis could move to shutter the former headquarters in Auburn Hills, Michigan.

Stellantis has significantly reduced the number of its U.S. employees in recent years amid Tavares’ cost-cutting measures.

Stellantis has reduced employee head count by 15.5%, or roughly 47,500 employees, between December 2019 and the end of 2023, including a 14.5% reduction in North America, according to public filings. That doesn’t include further head count reductions and layoffs this year.

The automaker had only about 11,000 U.S. salaried employees at the end of last year. That compared with 53,000 at General Motors and 28,000 at Ford.

The reductions have occurred as Stellantis has attempted to outsource many engineering efforts to lower-cost countries such as Brazil, India and Mexico, according to several people familiar with the moves.

Bloomberg News earlier this year reported that Stellantis moved to recruiting a majority of its engineering workforce in those countries, where the cost per employee amounts to roughly €50,000 ($53,000) or less per year — far less than similar positions in the U.S. and Europe.

DETROIT — Stellantis is suing the United Auto Workers, escalating a monthslong battle between the trans-Atlantic automaker and American union, CNBC has learned.

In an internal message Friday to employees that was confirmed to be authentic, the company said it is suing the UAW as well as a local chapter in California that participated in a strike authorization request vote at Stellantis’ Los Angeles Parts Distribution Center.

“This lawsuit would hold both the International and the local union liable for the revenue loss and other damages resulting from lost production due to an unlawful strike,” Tobin Williams, Stellantis senior vice president of North America human resources, said in the message.

A supermajority of UAW members at Stellantis’ Los Angeles Parts Distribution Center voted to request strike authorization from the International Executive Board if the company and union can’t reconcile, the union said Friday morning.

The complaint is intended to “prevent and/or remedy a breach of contract” by the UAW, according to a copy of the lawsuit that was filed Thursday in U.S. District Court in the Central District of California.

The lawsuit argues that if the union does strike, the court “should award Stellantis monetary damages” that result from a breach of contract.

UAW President Shawn Fain addressed the lawsuit Friday in a letter to union leadership at Stellantis. He called it and other actions by the company “desperate actions from a desperate executive who has lost control.”

“Our legal team has complete confidence in our right to strike. The company’s legal threats are just that—threats intended to intimidate us, so we won’t fight back,” Fain said.

The dispute between the two sides centers on the union alleging Stellantis has not kept contractual obligations as part of a deal the two sides reached late last year. It comes after Stellantis has made several cuts to plant production, conducted worker layoffs and delayed potential investments outlined as part of the 2023 contract.

Fain has routinely said the union will strike if needed, however Stellantis has argued that would be unlawful under the contract.

The automaker has contended that there’s language in the contract that gives it leniency to change plans based on market conditions, plant performance and other factors.

The company reiterated that stance in its lawsuit and cited “Letter 311,” which includes the company’s expected investments: “The planned future investments in the letter are conditional, require Company approval, and are subject to change based on these business factor contingencies.”

The lawsuit came the same day Fain and union members held their latest rally against Stellantis in suburban Detroit.

“We’re here today for one reason. Stellantis CEO Carlos Tavares is out of control and it’s once again up to UAW members to save this company from itself,” Fain said during the event. “A strike will cripple this company. And if we have to strike, it’s Stellantis’ decision to do so because they are not honoring their commitment.”

The union and several local chapters have filed grievances against the automaker regarding contract obligations and other issues.

Stellantis, in the lawsuit, called the grievances a sham designed to “justify mid-contract strikes against Stellantis that otherwise would violate the [contract’s] no strike clause.”

DETROIT — Stellantis‘ U.S. new vehicle sales continued a yearslong free fall during the third quarter, despite CEO Carlos Tavares’ attempts to correct what he has called “arrogant” mistakes.

The trans-Atlantic carmaker reported U.S. sales Wednesday of 305,294 from July through September, a 19.8% decline from the third quarter of 2023 and an 11.5% decrease from the prior three months of this year.

Stellantis was expected to be the worst sales performer of major automakers during the third quarter. Auto industry forecaster Cox Automotive had projected a sales decline of roughly 21% for the carmaker.

Cox and fellow forecaster Edmunds expect third-quarter sales industrywide will be down roughly 2% compared with a year earlier.

Still, Stellantis said its initiatives to boost sales and correct past mistakes are starting to pay off. The automaker cited a market share increase during the third quarter from 7.2% to 8% as well as an 11.6% reduction in its U.S. vehicle inventory.

“We continue to take the necessary actions to drive sales and prepare our dealer network and consumers for the arrival of 2025 models,” Matt Thompson, Stellantis head of U.S. retail sales, said in a release.

All of Stellantis’ brands except for its niche Fiat unit experienced sales declines in the third quarter, led by more than 40% reductions for Chrysler and Dodge. Its Ram truck brand recorded a roughly 19% fall, while Jeep was off about 6% year over year.

Stellantis’ third-quarter sales are the latest problem this week for the carmaker, which cut its 2024 profit margin forecast and has been hit with a recall involving popular plug-in hybrid electric Jeep models due to fire risks.

Shares of the company on the New York Stock Exchange are off 41% this year. The stock hit a new 52-week low Tuesday and closed at $13.71, falling 2.4% for the day.

During a June investor event, Tavares said the company would correct “arrogant” mistakes made by himself and the company in the automaker’s U.S. operations that led to sales declines, bloated inventories and investor concerns.

He said the convergence of three factors led to the problems: not selling down vehicle inventory fast enough; manufacturing issues, specifically with two unnamed plants; and a lack of “sophistication in the way to go to market.”

U.S. sales for Stellantis, formerly Fiat Chrysler, have declined every year since a recent peak of 2.2 million in 2018. The company sold more than 1.5 million vehicles last year, a roughly 1% decline from 2022, when it reported a significant drop of 13% compared with the previous year.

Stellantis’ performance compares with the overall U.S. new light-duty vehicle sales market, which increased 13% last year, according to federal data.

Tavares has been on a profit-driven, cost-cutting mission since the company was formed through a merger between Fiat Chrysler and France’s PSA Groupe in January 2021.

He has prioritized profits and vehicle pricing over market share, leading to heavy criticism from the United Auto Workers union and Stellantis’ U.S. franchised dealers.

Correction: Stellantis reported U.S. sales Wednesday. An earlier version misstated the day.