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In the Red: Each Fiat 500 Electric Car Loses Chrysler $10k

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2012 Fiat 500 Electric/Elettra

2012 Fiat 500 Electric/Elettra

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There is nothing a company CEO hates more than not making a profit on a product, but as Fiat Chrysler CEO Sergio Marchionne knows, it is sometimes a necessary evil in the evolution of a new technology. 

Speaking at Fiat S.p.A’s general meeting on Wednesday, Marchionne spoke frankly about his company’s involvement in electric cars. 

“The economics of EVs simply don’t work. On the 500 that (Chrysler) will begin selling in the U.S. next year, we will loose over $10,000 per unit despite the retail price being three times higher”

The small four-seat retro-styled hatchback has a huge following in Europe, where the gasoline version was subject to a six month waiting list shortly after launch. 

Atomik Fiat Abarth 500 Electric

Atomik Fiat Abarth 500 Electric

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Designed as a homage to the original rear-engined Fiat 500 made between 1957 and 1975 the current 500 is Fiat’s answer to BMW’s retro-inspired Mini.

Retro styling or not, Marchionne’s comments spell potential trouble for the automaker’s ability to sell the all electric version when it launches in 2012. 

Based on the U.S. list price of the Fiat 500, the electric version could cost as much as $45,000 - an increase of over $12,000 based on Marchionne’s own price estimates from last year. 

Despite the predicted losses, Fiat Chrysler plans to forge ahead with the 500 Electric rollout, hoping that its initial losses will be recouped in coming years as the cost of production and battery packs drops and the popularity of electric cars increases. 

Still recovering from Chrysler’s bankruptcy and with an already scaled back plug-in and hybrid development cycle, Fiat Chrysler could be taking one gamble too many.

But there are success stories. It took king of the hybrid Toyota many years before it started to make significant profit on its iconic Prius, and Nissan is expected to take a similar amount of time before its investment in the 2011 Leaf pays off. 

Ultimately, unless Fiat Chrysler can reduce the predicted sticker price of the Fiat 500 electric it will remain a very niche vehicle with competing electric cars of greater size and lower cost taking the majority of market share.

[Automotive News (subscription required)]

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Comments (10)
  1. "..we will loose over $10,000 per unit despite the retail price being three times higher." Nonsense, short range EVs should be MUCH LESS than the ICE, transmission, exhaust, starter, electrical system, etc costs. Just say, "I want to crush EVs like GM did." for oil interests.
     
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  2. The economics of EVs simply don’t work. On the 500 that (Chrysler) will begin selling in the U.S. next year, we will loose over $10,000 per unit despite the retail price being three times higher”
    How much did Toyota lose on the early model Prius? Everybody was laughing at them. Are they laughing now? Toyota has been eating everyone's lunch for the past few years with the Prius because they took the chance to invest (and subsidize) hybrid technology. Keep living in the last century Marchionne and Fiat ans Chrysler will become even more irrelevant than they are now, if that's even possible.
    Want to see what's THIS Marchionne? Take a look at these photo's of the drive train of the 2013 BMW i3: http://bmwi3.blogspot.com/2011/03/bmw-i3-light-weight-means-less-energy.html
     
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  3. I meant to write: "Want to see what's THIS century Marchionne?"
     
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  4. There is nothing a company CEO hates more than not making a profit on a product, but as Fiat Chrysler CEO Sergio Marchionne knows, it is sometimes a necessary evil in the evolution of a new technology.
    Did you guys overlook the above? Marchionne knows he'll lose money but did he say anywhere that Chrysler's dropping out of the running for all-electric 500's (and other Chrysler all-electric products)? No, he didn't.
    He's right-they will lose money. But he is willing to do it to stay in the all-electric "game" and deal them out. For $45,000 a pop. Could be $45,000, that is.
     
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  5. B-Man: The problem I have with it is his quote "The economics of EVs simply don’t work". That's nonsense. I understand that an EV will cost slightly more than the same model with an ICE, but how can he say the the Fiat 500 EV will cost basically $55,000 (10K more than 3X an ICE 500)It has a tiny 15 kWh pack some electronics and a small electric motor. Perhaps Marchionne is adding all the R&D money spent on electric drive onto the cost of this one car? The battery can't cost them more than $8,500 to $10,000. Where is the rest of the $30,000 extra coming from?
    Of course the economics of any low-production vehicle doesn't work, everybody knows that. I think the low production numbers have more to do with the excessive cost than the fact that it's a BEV. It's disingenuous to simply blame it on the fact that it's a BEV.
     
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  6. CEO Marchionne's figures don't add up. It is widely understood that the Nissan Leaf's battery costs about $9000. Even if Fiat had to pay $10,000 because Fiat can't negotiate a good deal, it makes no sense to say that the car costs three times that of the gas version. So as Tom above notes, where is the CEO getting his numbers?
    I don't believe that manufacturers are intentionally avoiding electric vehicles, but with CEO's like Fiat's, you got to wonder.....
     
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  7. Doug: Plus the LEAF's battery is 24kWh and the 500's is only 15 kWh. I gave him the benefit of higher cost due to weaker purchasing power when I figured 8 to 10K. They are probably paying much less than that for the relatively small pack (it's even smaller than the Volt's). He has to be dumping a lot of their EV R&D costs on top of this one car to come up with a cost of $55K/unit. R&D that they can use on future models and perhaps even hybrids.
    The silver lining is that it may not represent the feelings of others in the company. I know it must be tough to dump a lot of money into a technology that you know you won't make any money off for quite a few years. However to succeed in the auto industry, you have to be looking at and planning for the future, not just next years products. New platforms can take five to seven years to fully develop. Where will the EV market be in 2018? Nobody knows for sure, but I wouldn't want to be an auto manufacturer in 2018 without a competitive BEV in my showroom, I'll tell you that.
     
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  8. The $10k loss he's speaking of are probably due to the lack of replacement parts and service they can sell you
     
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  9. I think Fiat are completely right to invest in electric vehicles right now. When EV production costs come down Fiat will be well ahead of the game with regards to technology. I only hope they start production on an electric commercial vehicle soon.
     
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  10. Fiat needs to suck it up. Now that they have Chrysler maybe they can improve that and make some money.
     
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