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Chrysler CEO Underscores, Again: Electric Fiat 500e Loses Money

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OK, clearly he shouldn't have said, "I hope you don't buy it."

But last week's little media explosion over Fiat Chrysler CEO Sergio Marchionne's negative comments on the 2014 Fiat 500e electric car his company sells--in limited numbers, in California only--shouldn't be a surprise.

To summarize his comments in a Reuters article that appeared last Thursday, Marchionne said of the 500e that the company loses $14,000 on each one, that the sole carmaker turning a profit on selling electric cars is Tesla Motors, and that he hoped to sell only the minimum number required.

The refreshingly outspoken CEO has been clear for several years that he'd rather not have to build and sell small numbers of battery-electric vehicles to meet the requirements of a single state, California.

DON'T MISS: Electric Cars: Some Are Real, Most Are Only 'Compliance Cars'--We Name Names

Left unsaid in the article was that his advice to a Brookings Institution audience in Washington, D.C., would be followed: You cannot buy a Fiat 500e in Washington. In fact, you cannot buy one anywhere outside selected Fiat Studios in northern and southern California.

2014 Fiat 500e

2014 Fiat 500e

Enlarge Photo

The car exists solely to meet the requirements of the California Air Resources Board's zero-emission vehicle mandate, which requires the six automakers selling the most cars in the state to deliver set numbers of vehicles with no tailpipe emissions at all from 2012 through 2017.

That makes it what's called a "compliance car"--a vehicle sold in only a few markets to meet regulatory requirements, and in volumes only great enough to keep the carmaker legal.

Fiat Chrysler--in 2012, still just Chrysler--happens to be number six on the list of six best-selling makers in California.

So in partnership with partsmaker Bosch, which designed the battery pack and much of the drivetrain, it developed the very low-volume Fiat 500e electric car, launched in April 2013.

2013 Fiat 500e electric car, Los Angeles drive event, April 2013

2013 Fiat 500e electric car, Los Angeles drive event, April 2013

Enlarge Photo

The 500e is a remarkably good car, as its engineers came to realize. It's fun to drive, it's quieter and smoother than the original, and it's got plenty of power (if not quite as much as the hot-hatch 500 Abarth range).

ALSO SEE: 2013 Fiat 500e Electric Car: First Drive

Which put the Chrysler staff at last year's launch event in an awkward position: Their obvious pride in the electric 500 stood out in stark contrast to their CEO's stated dislike for the car and for the regulations that required the company to build it--neither of which they were willing to comment on.

Looked at from Marchionne's point of view, however, the 500e is a costly and unprofitable distraction.

Fiat Chrysler currently has far, far greater problems than electric cars.

Five years after Italian Fiat took control over the bankrupt and decimated Chrysler, it has only started to build vehicles for all its brands on common underpinnings.

2013 Fiat 500e electric car, Los Angeles drive event, April 2013

2013 Fiat 500e electric car, Los Angeles drive event, April 2013

Enlarge Photo

And it has a lot of brands. Alphabetically, they are Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Lancia, and Ram (leaving out Ferrari and Maserati, which are quite separate).

Its first U.S. car on shared architecture, the Dodge Dart compact sedan, has not sold at the expected volumes.

Its 2015 Chrysler 200 mid-size sedan is modern, stylish, and comfortable--but will U.S. buyers actually consider buying a passenger car from a company far better known for sport-utility vehicles and pickup trucks?

MORE: 2015 Fiat 500 Updated With New Instrument Cluster, Display Options

The Fiat Chrysler story has many chapters to come, but while electric-car advocates grumble and spit at its CEO's comments, they simply reflect reality.

For Fiat Chrysler, near-term survival is far more important than longer-term plug-in technology.

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