Fiat 500 EV Will Cost Chrysler
Chrysler will lose $10,000 on every electric Fiat 500 it sells, CEO says.
That heavy financial hit won't stop the automaker from launching the Chrysler-built electric version of the minicar in the United States in 2012, underlining the pressure automakers face to improve fuel economy and remain competitive in the race to offer alternative powertrains.
"The economics of EVs simply don't work. On the 500 that (Chrysler) will begin selling in the U.S. next year, we will lose over $10,000 (per unit) despite the retail price being three times higher" than a version of the minicar with an internal combustion engine, Marchionne said on the sidelines of Fiat S.p.A.'s general meeting on Wednesday.
Marchionne said that Fiat would lose a similar amount on the Fiat 500 EVs it will get from Chrysler's Mexico plant once the Italian company starts the car's European sales, likely in 2013. Chrysler has a license from Fiat to build the fuel- and battery-powered versions of the 500, which means the U.S. automaker gets all the profits — or losses — from North American sales of the cars. Fiat has a 25 percent stake in Chrysler.
Chrysler unveiled a concept of the 500 BEV (short for "battery-electric vehicle") at the Detroit Auto Show in January 2010. The gasoline-powered 500 starts at $15,500 in United States, which means the electric version would cost more than $45,000, based on Marchionne's comments.
When a near-production concept the Fiat 500 EV was unveiled last year, Marchionne said the production model would start at $32,000, with the batteries accounting for half of the minicar's cost.
Low Volume, Possible Benefits
Although the per-unit loss is high, the automaker's total financial hit should be minimal because Fiat-Chrysler, without being more specific, said it would produce a low volume of the electric 500.
The company said that the primary reason for launching the EV was to enhance the company's electric mobility expertise, which it hopes will lead to advancements in its future gasoline-electric hybrid models.
Added benefits of the electric 500 include lowering Chrysler's average U.S. fuel consumption total and cutting Fiat Group's fleet CO2 in Europe, where every EV sold in 2012 and 2013 will count as 3.5 cars in the automaker's total. Fiat Group has the lowest fleet CO2 in Europe, 125.9 grams per kilometer, according to market researchers JATO Dynamics.
While Fiat and Marchionne are skeptical about the future of EVs, alliance partners Renault SA and Nissan Motor Co. see a bright future for battery-powered transportation.
The alliance partners aim to have a combined 1.5 million EVs on the road worldwide by 2016. The first model to come out of the alliance was the Nissan Leaf compact hatchback, which was named 2011 European Car of the Year.
The Leaf will be joined later this year by the full-electric Renault Fluence mid-sized sedan and Kangoo car-derived van. Renault-Nissan wants to have annual production capacity for 500,000 EVs by 2015. The partners have invested a combined 4 billion euros to develop EVs and batteries.
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If companies are really losing money for every electric/hybrid car they sell, even with the increased price of the vehicle, why are they doing this? If it is simply a ploy to increase their overall fuel economy for the line, as some previous posters have suggested, why don't they just bring over some of the diesel vehicles they sell in Europe? This would allow them to increase their overall fuel economy without losing money in order to do it. Of course, that would cut into the profits of the American oil companies and we wouldn't want that...
nowalls99, first, I believe part of the motivation to sell hybrids and electrics at a loss is just to gain experience with them......consider it real-world R&D.
Second, needing them to meet the latest 2016 CAFE requirements in undeniable. Full-line manufacturers can't possible do it without them. You can't be selling pickups and SUVs and hit the 35 MPG fleet average without them....so selling them at a loss protects profitable sales from other models.
Third, there is a political/public relations motivation to offer these vehicles. If the government sees that you're trying, maybe they'll stay off your back for awhile. Not to mention the public likes to see corporations being "green" as well.
Kudos to Chrysler/Fiat for sticking with it. I hope it has range and I hope tree huggers everywhere embrase and support this attempt.
That said, $32k for a car that is basically worth nothing in about 8 years is a pretty big pill to swallow for what it is.
I'd like to see more research in Kenetic Brake recovery. So much fuel today is wasted on slowing down. and how about RWD in-wheel motors like the ones Michilin and Active Wheel are working on?
Maybe they can find a way to make the car's frame and body skin out of the a material that themselves can serve as a battery. And when the body no longer holds charge,the whole car is sent in to be recycled like a giant battery.
These cars would make sense as a lease where you can say.. for $300 a month, I have transportation including fuel, maintenance and warranty for 5 years. Throw in a Gubment subsidized city parking pass and it will get some real attention. Come to think of it... F-yeah.. if you are driving a battery on wheels .. FREE City and State Charging, Parking and Tolls per some Gubment incentive program for the first 1/2 million EVs on the road..