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Fiat Chrysler CEO: Please Don't Buy Our Electric Car 462

schwit1 (797399) writes "The CEO of Fiat Chrysler said he hopes that people don't buy his company's electric car, the Fiat 500e, which he is forced to sell at a loss because of state and federal mandates. 'I hope you don't buy it because every time I sell one it costs me $14,000,' Sergio Marchionne told the audience at the Brookings Institute during a discussion of the auto bailout. 'I'm honest enough to tell you that I will make the car, I'll make it available which is my requirement but I will sell the limit of what I need to sell and not one more,' said Marchionne. Fiat Chrysler produces two Fiat 500s. The gas-powered Fiat 500 has a base price of $17,300. The electric Fiat 500e runs $32,650. In his candid remarks, Marchionne blamed regulations set in place in California and by President Obama." (Also at USA Today.) If they find they're selling too many for comfort, couldn't they raise the price?
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Fiat Chrysler CEO: Please Don't Buy Our Electric Car

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  • Indirect tax (Score:5, Insightful)

    by jlar ( 584848 ) on Friday May 23, 2014 @06:46PM (#47079497)
    This is in effect an indirect tax. Buyers of non-zero emission cars are effectively paying for the loss that automakers make on the zero emission cars. It would be much more honest to tax them directly instead of letting the auto industry act as an intermediary. But then again: taxes and honesty are probably not words that one should use in the same sentence.
  • Re:Indirect tax (Score:4, Insightful)

    by Anonymous Coward on Friday May 23, 2014 @06:52PM (#47079581)
    And it would also be more honest to tax people who drive gasoline vehicles for the damage their exhaust gases are doing to the environment rather than externalizing it. But, that's the way it goes.
  • by rsilvergun ( 571051 ) on Friday May 23, 2014 @07:12PM (#47079777)
    another way is to say that automakers are shifting their costs. Dirty air and smog lead to lung disease and cancer, ergo higher medical costs. The health problems also lower worker productivity.

    Why should I have to pay for the damage done by cheap cars?
  • by dbc ( 135354 ) on Friday May 23, 2014 @07:16PM (#47079805)

    I just dropped my daughter off at the gym. In a 15 minute round-trip drive, I counted 5 Leafs. Nissan isn't trying to stop people from buying their car. Neither is Tesla.

  • Re:Raise the Price (Score:5, Insightful)

    by wagnerrp ( 1305589 ) on Friday May 23, 2014 @07:18PM (#47079823)

    But really, if they have to make at least X cars, and they're not making one more, why is he telling people not buy them? They're still making the exact same number. If some people listen to him and don't buy them, doesn't that just mean they'll sit on the lot longer and sold for even less?

    Presumably as a PR stunt to bring attention to the regulatory issue.

  • Re:Raise the Price (Score:4, Insightful)

    by stephenmac7 ( 2700151 ) on Friday May 23, 2014 @07:24PM (#47079871)
  • Re:Indirect tax (Score:5, Insightful)

    by AaronW ( 33736 ) on Friday May 23, 2014 @07:32PM (#47079951) Homepage

    I see tons of EV cars in California. Leafs are everywhere.

    If Tesla can make a full-sized sedan with a 265 mile range (85KWh battery) for $73,570 while averaging a 25% profit margin there's no reason why Fiat shouldn't be able to make a profit selling a much smaller car with a much smaller battery and a much smaller range. Perhaps they should invest in Tesla's gigafactory to bring down cost and/or license Tesla's batteries like Toyota did. If they're like Nissan then they only need around 1/4 the capacity of Tesla's 85KWh battery pack, a smaller electric motor and a smaller inverter. If it cost Fiat $46,650 per-car then they're doing something wrong. They're probably using those more expensive, lower energy dense LiFePo prismatic batteries that everyone except Tesla is using.

  • by evilviper ( 135110 ) on Friday May 23, 2014 @07:33PM (#47079959) Journal

    This is the same mindset automakers had back in 1994, when the California (CARB) emissions standards were going to (eventually) require a tiny percentage of all cars sold had to be zero-emission vehicles (ZEVs).

    Ford's Th!nk and Chrysler's EPIC were piles of crap ("compliance cars") produced just to minimally meet the regulations. GM thought they could one-up them, and produce an actually NICE ZEV that people would WANT, which would then allow them to sell MORE conventional vehicles, which is where the infamous EV1 came from. Toyota had a similar mindset as GM, but couldn't compete on ZEVs, and invented their Prius as an alternative to meet the standards.

    The successful court challenges to the CARB rules set back ZEVs by two decades, and we're repeating history again, today. GM makes a nice ZEV (with some inspiration from Tesla and Toyota this time), while Ford and Chrysler sell crap ZEVs they have to give away, and Toyota doubles-down on their Prius with longer range and plug-in capabilities.

    Nissan is the only surprise, being quite competitive this time around, while their previous Altra attempt, despite pioneering lithium-ion battery EVs, wasn't noteworthy at the time.

    http://www.ucsusa.org/clean_ve... [ucsusa.org]

  • Re:Raise the Price (Score:5, Insightful)

    by erice ( 13380 ) on Friday May 23, 2014 @07:33PM (#47079973) Homepage

    No, they can't. CA Regulations don't allow electric alternatives to be n% more than gas.

    Citation needed. I looked through the regulation and I see no mention of requiring a certain price for ZEV's.

    What it does require is that a certain % of the sales be of ZEV's. If they are change too much, they won't sell enough. This leads to two solutions:

    1) Spend little on R&D for an electric vehicle. Sell it just cheap enough (at a loss if you have to) to meet the minimum requirement. Whine about it.
    2) Put some effort and investment in developing an electric car that people will actually want with a manufacturing cost that leads to a price people are willing to pay. Refine the design over time so that it becomes that profit center that saves your bacon when the bottom inevitably drops out of the IC car market as the cost of gas heads toward the stratosphere.

  • by evilviper ( 135110 ) on Friday May 23, 2014 @07:48PM (#47080067) Journal

    And that, my friends, is why CAFE[1] standards are a stupid way of reducing emissions.

    Except this isn't about CAFE at all, but a specific ZEV mandate in CARB standards for the 6 largest automakers.

    These rules gave us the GM EV1, Nissan Leaf, the Toyota Prius, the Chevy Volt, and more. I'd say those vehicles are indications that the regulations are highly effective. You're free to disagree (once you get onto the correct subject), but I think the above list stands on its own.

    While there are a number of other "compliance cars" that aren't as noteworthy, they're still helping support ZEV R&D, and amortization of the costs.

    A web search for "compliance car" turns up numerous insightful write-ups:

    http://www.greencarreports.com... [greencarreports.com]

    http://www.autoguide.com/auto-... [autoguide.com]

    http://www.usatoday.com/story/... [usatoday.com]

  • Re:Raise the Price (Score:5, Insightful)

    by amiga3D ( 567632 ) on Friday May 23, 2014 @07:56PM (#47080113)

    It's US political discussion, or what passes for it. It doesn't have to and almost never makes sense.

  • Re:Raise the Price (Score:4, Insightful)

    by fizzer06 ( 1500649 ) on Friday May 23, 2014 @08:25PM (#47080281)
    You forget the government incentives.

    Damned government hand is in my pocket - again!

  • Re:Raise the Price (Score:4, Insightful)

    by Ol Olsoc ( 1175323 ) on Friday May 23, 2014 @08:35PM (#47080337)

    How many miles before you have to replace the batteries?

    Do not know for this car, but for the Prius, there is a full replacement for the batteries, up to 100K miles, and 160 K miles in California. And they haven't had to replace many - I've heard none at all, but am skeptical of that, you have to have some failures. But the warranty is golden.

    At least for the Prius, the "Your batteries will fail, and you'll have wiped out any savings" meme has not proven out in real life.

  • Re:Some context (Score:2, Insightful)

    by cascadingstylesheet ( 140919 ) on Friday May 23, 2014 @08:54PM (#47080479)

    California doesn't regulate the prices of electric vehicles: they require that either 1% of vehicle sales be zero-emission, or that the car manufacturer buy zero-emission credits.

    Nobody is forcing Fiat to build an electric car, and nobody is forcing them to sell that car at a loss.

    That doesn't make any sense.

    "Nobody's forcing you to pay protection money. You could just let Guido here break your legs."

  • Re:Raise the Price (Score:4, Insightful)

    by reboot246 ( 623534 ) on Friday May 23, 2014 @09:07PM (#47080543) Homepage
    You do realize that those incentives from government actually come out of taxpayers' pockets, don't you? I personally don't want my money helping pay for your new car.
  • Re:Raise the Price (Score:4, Insightful)

    by PopeRatzo ( 965947 ) on Friday May 23, 2014 @09:32PM (#47080677) Journal

    Are they being forced into a position any different from other car makers?

    One thing they teach in CEO basic training is how to piss and moan and deflect the company's problems away from your inbox, so I wonder how much of this complaining is simply posturing.

  • Re:Raise the Price (Score:5, Insightful)

    by amxcoder ( 1466081 ) on Friday May 23, 2014 @10:53PM (#47081015)

    This is the funniest comment I've heard. While I'll admit, most republicans and conservatives alike (yes, there is a difference), don't like some of the tactics and fundamentals of unions, your comment is highly ironic. I don't think the republicans WANT to force the company out of business, I think most conservative groups and libertarians were agains the auto bail-out in general. Mostly because it goes against free market principles, and also rewarded specific companies for mismanaging the company into bankruptcy. This is true of the auto companies that were bailed out, as well as the banks that were bailed out. The UAW took a big hit, because a big chunk of the bailout went to make sure the Union still got it's demands met, for hourly wages and retirement perks, all from a dying company. If any other company was about to founder, the last thing most employees would get would be raises and more pay. I certainly didn't when I worked for a company that was going under, they told us the truth, they were hurting, they enacted unpaid furlough days, and froze all pay increases as a step in trying to save the company from going under. While us workers didn't like this necessarily, it was better than all of us get let go when the company goes under.

    The part of your comment about forcing them at gunpoint to sell cars at a loss is the ironic part of your statement. Just WHO do you think is the party and groups that are pushing the hardest for electric car sales? Who is pushing the hardest for higher, hard to meet CAFE standards for gas mileage, and who is behind the electric car subsidies to try to entice the general public to purchase these overpriced, under-performing, cars? Here is a hint... it's not conservatives.

  • Re:Raise the Price (Score:3, Insightful)

    by arth1 ( 260657 ) on Friday May 23, 2014 @11:23PM (#47081141) Homepage Journal

    On on Friday May 23, 2014 @07:24PM, stephenmac7 (2700151) wrote:


    As if there was a difference in other than posturing.

  • Re:Raise the Price (Score:5, Insightful)

    by blindseer ( 891256 ) <blindseer@@@earthlink...net> on Friday May 23, 2014 @11:53PM (#47081241)

    You are assuming that the problems with the price of electric cars versus gasoline cars is economies of scale. If that were true then we'd think that Chrysler would want to see their electric cars be successful. Problem is that gasoline cars are made of iron and aluminum, two of the most abundant elements on Earth. Electric cars need lithium for the batteries, an element that is relatively rare and therefore will always be more expensive.

    Where is the benefit in electric cars anyway? Our electricity comes from coal and natural gas. We could build more wind and solar but that means energy prices triple, if we're lucky. It's quite possible energy would be ten times what it costs now if we cannot use fossil fuels or nuclear. We can build nuclear power plants and get cheap energy with very little carbon output, lower carbon output than wind and solar per kWh produced.

    Nuclear power does not address the issue of the cost of materials in electric cars. What would lower our carbon emissions and give us cheap energy is synthetic fuels. We can make hydrocarbons from carbon in the air and close that loop, no new carbon added to the atmosphere. Power it all from nuclear power. Then we get to have our cars made from cheap iron and aluminum. We also get to keep our 300 mile range from a five minute fill up.

    Using waste annihilating molten salt reactors also means we get to burn up the "spent" fuel from old reactors that keep piling up. Nuclear power means cheap energy, cheap cars, clean air, and reduction in radioactive waste. Electric cars means expensive energy, more carbon output, and unless we get modern nuclear power that radioactive waste will continue to slowly decay away. We can get rid of the waste in decades with modern nuclear power or we can let it sit for hundreds of years.

    Economies of scale cannot compete with the laws of physics.

  • by MouseTheLuckyDog ( 2752443 ) on Saturday May 24, 2014 @01:45AM (#47081597)

    And your daughter couldn't walk to the gym?

  • Re:Raise the Price (Score:3, Insightful)

    by SuricouRaven ( 1897204 ) on Saturday May 24, 2014 @02:45AM (#47081789)

    And I don't want my tax money paying to support state-subsidised religious schools* or some empire-building military operation in Afganistan. If you do not wish to be part of the country, then by all means leave and apply for citizenship elsewhere. Or stay, an put your vote to use.

    *I'm in the UK. The government is very keen on public-private partnerships in education.

  • Re:Raise the Price (Score:4, Insightful)

    by erikkemperman ( 252014 ) on Saturday May 24, 2014 @04:04AM (#47081953)

    If the left and right look the same to you, it's either because you're a centrist (doubtful), or some kind of libertarian weirdo.

    Or he might be an international observer, to whom the American "left" seems rather far to the right of what they would normally consider the left wing, or even the center for that matter.

  • Re:Raise the Price (Score:5, Insightful)

    by Rei ( 128717 ) on Saturday May 24, 2014 @05:20AM (#47082077) Homepage

    I can guarantee you that he's not "exhausting every resource he can muster" because there's really just one figure that matters most, and that's volume.

    Most people think EV prices are all about the batteries, but that's just not true. Even the drivetrains are really expensive. *Everything* is really expensive because they're made in small volumes. The Volt's drivetrain, for example, reportedly costs about $6k per vehicle. Why? It's a heck of a lot simpler than a gasoline drivetrain, with a tenth as many moving parts and less raw materials costs. But they're just not mass produced. Here's [enstroj.si] my favorite line of EV motors, the EMRAX series. They're the size of a desk fan yet have up to 160kW peak power (215hp); they're designed for electric airplanes, and can be inline chained together for even more power. Simple, tiny, no exotic raw materials... but they cost something like $4k each, plus something like $3k for the inverter/controller. Why? Because they're all wired by hand. Even the magnets are hand-wound. With enough volume, you could open a Chinese factory to pump out something like that for maybe $500 dollars a pop. But that's just not the situation today.

    The same thing applies to batteries, which is why Tesla's gigafactory is such a big deal. A lot of people seem to think, "But hey, batteries are already mass-produced!". But really, those are the wrong kind of batteries, batteries designed for small electronics, not the type of large EV batteries you can get serious economies of scale on rather than wasting your effort stamping out tens of millions of tiny casings and the like, then wiring ten thousand little cells together and trying to ensure no cell failures. Also the batteries that best suit EVs are cobalt-free, while the potential for price reduction on your typical small electronics li-ion batteries is limited by cobalt prices; the raw materials on most EV batteries are far cheaper, it's always been manufacturing costs that have held them back. Something like the gigafactory has the potential to dramatically slash EV pack prices per kilowatt hour.

    Basically, in pretty much aspect, if you want EVs to be cheap, you need to go big. Just like it is for gasoline cars, the key to affordability is scale. If your team responsible for a gasoline car engineers every part from the ground up and produces them in small volumes like some supercar makers do, it'll cost an arm and a leg and your firstborn as well.

    To go big, you need a combination of an interested, motivated public and a good sales campaign. Once people start driving EVs, as a general rule, they love them and never want to switch back, but it's hard getting them to start, especially because of "range anxiety" concerns. So things like including with a purchase or lease X number of free 24-hour gasoline car rentals, or installing widespread fast charters, or making available range-extending self-steering genset trailers, or things of that nature is important to making people comfortable enough to take the plunge the first time. And of course subsidies can help a great deal while you're trying to establish the market.

  • They seem to be sticking their heads in the sand and hoping that EVs go away. Rather than seeing how Tesla is doing and worrying about the affordable model coming in a year or two they just churn out a lazy compliance car by shoving batteries in an ICE car, shove their fingers in their ears and hope no-one buys them.

    Fiat Chrysler is a dinosaur, and is going to be killed off by evolution unless it makes a real effort.

  • Re:Raise the Price (Score:4, Insightful)

    by Shadow of Eternity ( 795165 ) on Saturday May 24, 2014 @09:00AM (#47082603)

    You "think" wrongly then. Republicans are pro-corporate welfare and anti-union. They're only talking big about being anti-bailout these days because it's just one more reactionary way to oppose the president on absolutely everything.

"If it's not loud, it doesn't work!" -- Blank Reg, from "Max Headroom"