Industry titan thinks the numbers won’t stack up.
Electric vehicles are more than just the flavour of the day, with automotive conglomerates around the world pushing more and more funding toward the cause, cementing these silent-running cars as the mobility solution of the future. Even without a DeLorean time machine, it’s clear to most that electrically-propelled vehicles are here to stay, with a lot of that credit going to pioneering companies like Nissan and Tesla, with the latter popularising the luxury-EV proposition further than anyone thought was previously possible.
And while there are plenty of people who’ll back Tesla and compare them to Apple, one industry figure has cast his doubts on the viability of their business. Sergio Marchionne, the famously-blunt CEO of the Fiat-Chrysler group, said that the EV wave isn’t really backed by solid financial return. Marchionne’s ruthless management style is well-documented, with many noting that he was dismissing one manager a day at Fiat and Chrysler when he was first appointed CEO, which aided the remarkably-quick turnaround of the two companies shortly after he took the helm.
“We still don’t have a viable economic model for delivering an electric car. As much as I like Elon Musk, he’s a a good friend who’s done a phenomenal job marketing Tesla, I remain unconvinced of the economic viability of the model he’s pitching.” — Sergio Marchionne, CEO, Fiat-Chrysler Automobiles
Tesla may be enjoying immense success with the amount of interest in its latest Model 3 compact saloon, but profits are still a way away given that they’ve only successfully delivered some 220 cars since its launch, far from the 1,300-odd that was expected by now. Of course, this is being blamed on “production bottlenecks,” with Elon Musk admitting that the company is presently “deep in production hell” trying to meet the ridiculous amount of demand for the 3.
Rather than taking a full-electric direction, Marchionne is hedging his bets on hybrid technology, as he reckons that the combination of an internal-combustion engine and an electric motor is the best way to maximise efficiency, at least until the production of pure-electric cars gets cheaper.
“We need to be careful when we embrace electrification. We lose money on every Fiat 500 electric that we sell in the US. If I were to do it again, I would reduce the loss, but I wouldn’t make any money. And you can’t run economic entities on losses. We are investing without making a lot of noise on electrification. We will combine it with combustion to yield the right level of CO2. But we’re not betting the bank on going fully-electric in the next decade. Won’t happen.” — Sergio Marchionne, CEO, Fiat-Chrysler Automobiles
FCA is no stranger to fully-electric cars, with Fiat selling the 500e electric-hatch in the US market all the way back in 2013 which Marchionne claimed lost the company $10,000 per car, leading him to advise potential customers not to buy one. That said, this mention of working quietly on electrification raises some questions, as perhaps FCA has some real EV tech waiting in the wings. Marchionne has said in the past that if the Tesla Model 3 can turn a profit, he’d “copy the formula, add Italian design flair, and get it to market within 12-months,” which isn’t something you can suggest without having real technology at your disposal.
Stay tuned to CarShowroom as we bring you updates as they come.
