2014 Fiat 500eEnlarge Photo
There's reportedly been a long waiting list for these cars, with a $199/month lease deal and, yes, even some reports of markups.
Yet Fiat has sold only a few hundred of these sought-after machines.
Why? Because the automaker doesn't want to sell one more car than it has to.
The Fiat 500e is a vehicle that Fiat Chrysler didn't really want to make, one on which the automaker will likely lose $10,000 or more per vehicle. Yet it's one that the company plans to make for several more years--in tiny numbers.
That's because the Fiat 500e is no goodwill gesture for electric-car fans. It's a so-called 'compliance car,' required by California as part of a program to phase in tighter emissions standards (and better vehicle fuel efficiency).
Light-duty vehicle type scenario, now-2050 (California Air Resources Board)Enlarge Photo
Under the California Air Resources Board ZEV (zero-emission vehicle) credit program, electric-vehicle manufacturers get a credit for every plug-in vehicle they sell in California and eight other states. They can buy, sell, and trade those credits with other automakers.
In return, the six highest-selling automakers can offer their full vehicle lines in California, including those with very low fuel-economy ratings, without being hit with state fines.
Pay with plug-ins, to play with guzzlers
According to Scott Shepard, a research analyst at consulting firm Navigant Research, which has examined the market around such vehicles, the ZEV program is designed as a 'pay-to-play' approach.
“You produce enough vehicles that have a high-mpg rating, then you're able to play the game, and [sell] a lot of low-mileage vehicles, like SUVs and trucks,” said Shepard.
“And then you can make your money back on those higher-demand vehicles with low mileage."
For the regulations in place through 2017, only six automakers in California are required to comply.
After that, things get more interesting, with tighter requirements to be phased in each model year from 2018 through 2025--and applying to more makers as well.
Shepard argues that building low-volume compliance cars--not only the Fiat 500e, but also the Chevrolet Spark EV, Honda Fit EV, and Toyota RAV4 EV--has been good for the automakers.
The experience, he says, adds up to something better than what they might have learned with normal R&D or small, controlled test fleets of a few dozen cars.
“These are small-volume cars; they've been great testers, in terms of the manufacturers trying to figure out whether this is something they can actually do and profit from on a larger scale.”