I saw this story a few days ago and decided not to cover it, but then Chris went ahead and wrote up a good piece on it, so below it is. However, I want to make a couple of key points as well first:
1) It requires a lot of work and money to design a new car model. Even more so if its a totally different kind of automobile than what you normally design. In the latter case, you also have to set up new supplier partnerships, new services, new sales procedures, etc. So, when an automaker designs a new car, and especially its first electric car, it needs to sell a certain number of them before it regains the money put into all of that. You have to scale up to get… economies of scale. It’s common sense in businesses, especially in the automobile world. With that simply explanation out of the way, when the CEO of an auto company (aka Fiat) complains that the company is losing money on its first electric car but then doesn’t own up to the fact that the blame is 100% on Fiat, that CEO is acting like a moron. The Fiat 500e has actually gotten great reviews and would make it into the homes of many, many happy customers… if Fiat actually tried to sell the damn thing!
The fact is, Fiat hasn’t gotten the memo that the future of automobiles is electric. Or it got the memo and simply isn’t interested in moving into the future. When the company was essentially forced to produce an electric car in order to sell its other vehicles in the large California auto market, it actually created a great little electric car, but its chaperone (Fiat-Chrysler CEO Sergio Marchionne) has accompanied it into the market kicking and screaming. Furthermore, Fiat has kept the car in a tiny portion of the market and seems to have only produced the bare minimum required to keep selling its other cars in California. Either through idiocy or… well, idiocy is the only thing that comes to mind… rather than produce and sell the car at a scale where Fiat gets its money back and starts making a profit, Mr Marchionne has decided to bash electric cars and tell customers to not buy the Fiat 500e (as if they could anyway). Never mind that the 500e has been bringing many new customers into the Fiat brand.
2) Regarding Mr Marchionne’s comments regarding other electric cars on the market, they’re absurd. Renault-Nissan Chairman and CEO Carlos Ghosn is very bullish on electric cars and is happy to be the leader in electric car production. The Renault-Nissan Alliance has sold well over 100,000 elecric vehicles (including the Nissan LEAF, Renault ZOE, Renault Twizy, Renault Kangoo ZE, Renault Fluence ZE, and Nissan e-NV200). It’s not doing this out of charity or to be in compliance with California law. It’s making money on these vehicles. Even when the Nissan LEAF got a $6,000 price cut in the US, Ghosn was sure to note that this wasn’t a subsidy to consumers but that the production costs had dropped substantially when Nissan started producing the LEAF in Tennessee.
Anyway, that’s my rant. Here’s more info from Chris:
A few years ago, Fiat-Chrysler CEO Sergio Marchionne said the company will lose $10,000 on every Fiat 500E EV it makes. Turns out he was wrong…by about 40%. According to Marchionne, Fiat loses some $14,000 on every electric car it loses. His solution? Asking people not to buy it.
But don’t feel bad for Marchionne or his massive corporation, because they have had ample time to invest and develop EVs. Remember the Chrysler ENVI program? Killed shortly after the Fiat takeover. That was about five years ago. Imagine where their EV program might be today if they had just stuck with it?
Naturally, Marchionne blamed everyone but himself and his company for their failure to make money on EVs. According to the FCA boss, “…nobody out there that makes money on the electrification of vehicles, with the exception of Tesla, which only makes electric cars and sells them at a rather inordinate price.”
While I don’t know how true that statement is, it does sound like a load of bullshit to me, especially coming from the parent company of Ferrari and Maserati. Meanwhile, other automakers. including the two biggest EV makers, GM and Nissan, have slashed the cost of their EVs by at least $5,000, which all start in the same price range as the Fiat 500E. Are they just increasing their losses? Unlikely. Instead it sounds like Sergio was forced to make a car he didn’t want to, and did the worst job possible, expecting people never to buy it.
For Marchionne though, the Fiat 500E is a compliance car, and nothing more, and there are no plans to build anymore than necessary to meet CARB regulations in California. Unfortunately for him, demand of the electric Fiat is reportedly reaching a fever pitch. By most accounts, the Fiat 500E is an excellent vehicle that’s fun to drive, and with access to a conventional version of the 500 included in the lease price drawing customers into dealerships…only to have them leave when they encounter a months-long waiting list.
Instead of redoubling its efforts on EVs, which are proving more popular than predicted, Fiat is committing to diesels, and plans to offer a plug-in hybrid minivan capable of around 75 MPG. While I think both technologies have their place, Fiat-Chrysler is only putting itself further behind the curve by not developing a profitable EV of its own.
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