Stellantis, the automaker, plans to close and sell its Arizona vehicle proving grounds by the end of this year, according to information obtained by CNBC. This move is part of a series of cost-cutting measures under CEO Carlos Tavares, who has faced growing pressure from Wall Street, dealers, and the United Auto Workers (UAW) union due to the company’s declining financial performance, layoffs, and strategic decisions.

The Arizona Proving Grounds, a 4,000-acre site located between Phoenix and Las Vegas in Yucca, Arizona, has been used for vehicle testing since Chrysler purchased it from Ford in 2007 for $35 million. Three sources, speaking anonymously due to the private nature of the plans, confirmed the closure.

Starting next year, Stellantis intends to use a proving grounds facility owned by Toyota in Arizona, which Toyota began offering to other companies in 2021. Stellantis confirmed the closure on Friday, attributing the decision to ongoing efforts to enhance efficiency and optimize its real estate footprint in response to a shifting global market.

The company also announced that it is working with the UAW to provide special packages for employees at the Arizona site or offer transfers. However, workers may face indefinite layoffs with pay and benefits for up to two years. Currently, 41 employees work at the facility, 37 of whom are UAW members.

The UAW, which has been increasingly critical of Tavares and recent layoffs, has not yet commented on the closure. Stellantis operates multiple proving grounds, including a major U.S. site in Chelsea, Michigan. The Arizona closure was one of several facility closures Stellantis discussed with the UAW during contract negotiations last year.

Stellantis has also significantly reduced its workforce in recent years, cutting about 15.5% of its global headcount between December 2019 and the end of 2023, including a 14.5% reduction in North America. The company has outsourced much of its engineering work to lower-cost countries such as Brazil, India, and Mexico, where employee costs are significantly lower compared to the U.S. and Europe.