Stellantis Halts Jeep Production in Mexico Over Payment Dispute with ZF Joint Venture

Stellantis’ plant in Toluca, Mexico, has been idled since March 14 due to a severe dispute with ZF Chassis Modules over payments and price increases for components. The supplier—a joint venture between Germany’s ZF Friedrichshafen and Taiwan’s Foxconn Technology Group—supplies critical chassis parts. Stellantis stated that ZF Chassis Modules demanded a one-time payment of $70 million and further price hikes, despite Stellantis having already paid more than $26 million in December 2023 and accepted substantial prior price increases. The disagreement remains unresolved. In mid-March, after negotiations failed, ZF Chassis Modules halted shipments to the Toluca plant, disrupting production of the Jeep Compass, Jeep Cherokee, and the electric Jeep Wagoneer S. Notably, the new hybrid version of the Cherokee—launched in early 2024—is considered pivotal to Stellantis’ electrification strategy. Stellantis has filed a lawsuit in Oakland County Circuit Court in Michigan, accusing the supplier of “extortion” and seeking a temporary restraining order (TRO). On March 25, Judge Victoria Valentine granted an ex parte TRO, ruling that failure to intervene would cause “immediate and irreparable harm.” Separately, the supplier had threatened to cut off deliveries to Stellantis’ Windsor, Ontario, plant—which produces the Chrysler Pacifica and Dodge Charger—but Stellantis obtained an injunction from a Canadian court compelling the supplier to resume shipments, thereby avoiding a shutdown at the Windsor facility. Stellantis noted that its inventory of chassis modules lasts only a few hours, underscoring the vulnerability of just-in-time manufacturing when supply chains are disrupted. The company emphasized that legal action was not its preferred course but was necessary to safeguard the integrity of its production operations. As of now, it has not received a formal response from ZF Chassis Modules regarding the lawsuit. This dispute unfolds as Stellantis faces mounting pressure in its transition toward electrification. The company recorded a $26 billion impairment charge in 2025 related to strategic realignments, and the new Cherokee is seen as crucial to reviving sales momentum. Meanwhile, tensions between automakers and suppliers over cost-sharing continue to intensify amid volatile raw material prices, inflation, and the high costs of electrification—increasingly pushing legal remedies to the forefront as a last resort for resolving deadlocks.