FCA CEO Sergio Marchionne Says Biggest Drawback To Electrification Is OEMs Lose Supply Line Control

5 months ago by Eric Loveday 38

Chrysler Pacific Plug-In Hybrid

Chrysler Pacific Plug-In Hybrid

Fiat-Chrysler CEO Sergio Marchionne has never been an electric car supporter, so it’s no surprise that once again he’s got something he considers a negative to point out in relation to electric vehicles.

Chrysler Pacifica Hybrid Cutaway

Chrysler Pacifica Hybrid Cutaway

This is despite the fact that Chrysler recently debuted the 250-mile, electric Portal minivan concept.

We should take a moment to note that when Marchionne speaks about “electrification” and “electric” vehicles, he is referring exclusively to all-electric vehicles, or BEVs.

The company that makes the highly capable (in electric mode too) plug-in Pacifica minivan looks at extended range vehicles as a very viable segment that they want to play in – heck, check out the naming of the van itself – the Chrysler Pacfica Hybrid (no mention of electrification or plugs there). We also expect Chrysler to also debut a very mainstream, full size crossover, plug-in vehicle that will be headed into production very (very) shortly.

So, what’s Marchionne complaining about now? His current issue with all-electric vehicles centers around supply line control.

It seems Marchionne doesn’t like the idea of allowing suppliers to supply. Apparently, he’d rather FCA handle the making of most of the major components for its care.

We have to confess, we have no issues with more plug-in vehicles with usability like the Chrysler Pacifica Hybrid (and its 33 miles of all-electric range)

We have to confess, we have no issues with more plug-in vehicles with usability like the Chrysler Pacifica Hybrid (and its 33 miles of all-electric range)

Quoting Marchionne:

“The bad thing and a great thing about electrification is that most of it will rely on components being provided by suppliers to the industry and not by us.”

“The single largest drawback to electrification to us as OEMs is that we’re no longer in control of the components side; all batteries will be made by others.”

“It’s really a question of capacity and access to that capacity.”

We don’t see the “great thing” explained in this quote. It seems Marchionne is only focusing on what he considers a downside. And since when have major OEMs been “in control of the components side?” Much of that control was given away decades ago, it seems. But in typical Marchionne style, he’s always around to put all-electric vehicles down.

Source: Automotive News

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38 responses to "FCA CEO Sergio Marchionne Says Biggest Drawback To Electrification Is OEMs Lose Supply Line Control"

  1. jelloslug says:

    Just look at the awesome Dodge Dart if you want to see FCA control excellence.

    1. Jack says:

      Electric vehicles are cool but remember they are not at all environmentally friendly. If we actually cared about the environment we would all be driving something similar to a Lada.
      I hate the false claims about the revolution in electric vehicles. Batteries are terrible things for the environment both when manufactured and recycled. It’s a fashion for a world hell bent on consuming itself.

  2. AddLightness says:

    “The single largest drawback to electrification to us as OEMs is that we’re no longer in control of the components side; all batteries will be made by others.”

    No, you’ve bitched and complained about electrification for years instead of developing the internal technology competency and capacity yourself. You’re not the victim, your the idiot that has chosen to fall behind because you rather wait and copy other people’s achievements.

    1. Mark C says:

      Pretty much what you said.

      They drag their feet long enough and they fall way behind, as planned.

    2. RobSez says:

      The Nissan Leaf may not be the greatest electric car, but it is the world’s best selling EV. Until just recently Nissan built all their own batteries. Turns out they can get better batteries cheaper by letting someone else do it.

      Last time I checked about everything except the engine in most cars is built by sub contractors and just assembled by automakers like FCA.

      FCA is just setting themselves up for another bailout in the future when everyone else’s technology has moved past them yet again.

      1. Pushmi-Pullyu says:

        “Until just recently Nissan built all their own batteries. Turns out they can get better batteries cheaper by letting someone else do it.”

        It’s true that Nissan is now buying some battery cells from LG Chem, but it’s also true that once again Nissan is making batteries in all of its own battery factories.

        I think you are hinting at a potential problem: If auto makers invest a large amount of money in a battery factory, that can be a bad investment if the battery tech they’re using becomes obsolete. While that is a potential danger, it’s also true that new battery tech can be licensed and the existing factory can be revamped to use the new tech.

        For example, Nissan’s partner Renault made a battery-tech sharing agreement with LG Chem. This was publicly announced, no secret there. Did Renault share some or all of that with Nissan? No way to be sure, but it’s at least possible. Or Nissan could have made its own less public deal with LG Chem.

        http://insideevs.com/renault-inks-battery-deal-lg-chem/

      2. Summazooma says:

        No greater example of that, as produced in the US, than FCAs own Jeep Wrangler. They don’t actually manufacture any of it, other than powertrain, with a huge supplier park around TNAP shuttling in frames, bodies, interiors, etc. FCA is the assembler, not the actual manufacturer.

    3. Cavaron says:

      Yep. Didn’t he say something like “if Elon Musk can do the M3 for that price, I can do it 12 months later too?”.

      Seems he slowly realizes that he can’t, because he didn’t develop the tec inhouse.

    4. mx says:

      To be fair, they can’t even handle reliability. Electric would be too much for them.

  3. CLIVE says:

    Sergio needs ? with his Whine

  4. Pino says:

    It is labeled e’hybrid. Not just hybrid. On the vehicle.

    1. Jay Cole says:

      There is no “e” in its naming convention…it’s just Chrysler Pacifica Hybrid. I’ve never heard a Chrysler rep say that, or even seen that in print until your comment.

      Here is Chrysler’s US front page:
      http://www.chrysler.com/2017/pacifica/hybrid/index.html

      Here is FCA’s press kit on the Chrysler Pacifica Hybrid for the media:
      http://media.fcanorthamerica.com/newsrelease.do?id=17216&mid=779

      1. Vik says:

        He might have got that from the Pacifica Hybrid cutaway picture posted above, there is a leaf with a e inside it in front of the hybrid title, the same logo is present on the charge port. Other than that I have never heard of it being called a ehybrid.

        1. Pino says:

          If you look at Jay’s links. the video’s that are available as you scroll down shows E hybrid even in the interior screen graphics. It is no different than a volt. just less range and does require a little power assist above 50 percent thottle, but has more total horsepowe. In my oppinion it is more of an EV than the Ford Energi product line.

          1. Jay Cole says:

            A video of the instrumentation with the letter “e” in front of hybrid is long way from the product being labelled/referred to as “e Hybrid”

            …just saying to offer it here as being called a Pacifica e’Hybrid would be a massive misrepresentation of its actual naming. Chrysler is going out of its way to simply call it a hybrid and not a plug-in or EV.

  5. Alan says:

    He has a point, but when Tesla and no doubt others will follow, producing their own batteries they are taking a large chunk (which will only get bigger) of your business you have two choices, either get in the game or go out of business so stop whining.

    1. Pushmi-Pullyu says:

      ^ This.

  6. pjwood1 says:

    Marshione’s comment didn’t bother like yet another WSJ diatribe: “How Electric Vehicles Could End Car Ownership as We Know It”http://www.wsj.com/articles/how-electric-vehicles-could-end-car-ownership-as-we-know-it-1484488803?mod=trending_now_2

    Whatever ghost it was that got FCA to make Pacifica Hybrid, it was a good one. Its size, use and 6000+ watt charging ability look like they’ll go well together.

  7. goodbyegascar says:

    Nobody is stopping FCA from making their own batteries and other electric drivetrain components.

  8. Another (Euro) industrial point of view says:

    He is indeed pointing to a difficult challenge for OEM’s. As opposed to ICEs where technological progress is always slow and incremental, battery production runs an higher technological progress risk that can make your $$$ invested in tooling obsolete in a matter of months. The industry will need to hedge this risk somehow. Marchionne is special in the way that he is thinking out loud but probably most car makers CEO’s do have the same concern. Now as I read here that many are failing to grasp this as a difficulty we are bound to continue to hear for many years an huge whining noise from many EVs enthusiast failing to understand why OEM’s are so slow in switching from ICE to EV production.

    1. mx says:

      True, but really, haven’t they outsource ALL components to break the unions, and to limit liability?

      When your MBA runs the business instead of an engineer, you lose site of the product and control of innovation.

    2. no comment says:

      i think that sometimes insideevs goes overboard in trying to create controversies where one doesn’t exist in order to promote variations of “who killed the ev1” nonsense. marchionne was thinking as a businessman; the reason why he didn’t speak to the “great” aspect of electrification is that, from a business perspective, they are rather obvious: less need to sink up front capital in tooling, etc., which makes it easier for the auto maker to recoup his costs quickly since a bigger share of costs are variable. what is more nuanced are the downsides. with electric vehicles being an early stage technology (and 1% market share *does* mean “early adopter stage”), it is risky to make large investments when you don’t know how the technology is going to evolve over the next 10 years. tesla is at the forefront, but it’s like running a marathon, being the leader early in the race is risky because you make it easier for the runners behind you, who can conserve their energy for later in the race.

      that said, regardless of how the market develops going forward, tesla has pushed the development of the market for zero emission vehicles faster than what would have otherwise been the case.

  9. Jean-François Morissette says:

    Very very soon, more about that Jay? 🙂

  10. Jedlacks says:

    Sincerely, he should be more concerned about the “defeat devices” that is in question, instead of EVs. Maybe he is hoping that the Trump administration will cancel all the fines associated with their dishonesty.

    1. mx says:

      That’s why they fund the Repub party.

  11. Lou Grinzo says:

    So… dinosaur whines that mammals will make it harder for him and other dinosaurs to do things as they prefer? Considering the source, I am not the least bit surprised by his comments.

  12. CDAVIS says:

    I wonder if Sergio Marchionne’s many EV nuggets of wisdom over the years sound to his own team as incoherent ramblings? Almost seems like the topic of EV’s causes him to mentally short-circuit.

  13. Chris O says:

    What Marchionne means is a process he calls “disintermediation”, meaning a shift of core competencies to suppliers. That’s been going on for years but with EVs he anticipates that even core powertrain elements that the carmakers so far still mostly designed and build themselves will become off the shelf solutions offered by suppliers.

    So basically he fears being reduced to a coachbuilder, case in point the GM Bolt AKA LG Bolt.

    1. John Norris says:

      Or worse, companies like Deutsche Post will build their own EVs! Much to VW’s chagrin…

      http://uk.reuters.com/article/uk-deutsche-post-electric-van-idUKKCN10N16B

  14. Hauer says:

    What an idiot.
    Lamenting that the car maker does not make the drivetrain.
    Guess what? You could have developed that capability. If a startup-nobody like Tesla could do it, each of the trad. car manuf. could have done it. They just were (and still are) too damned stupid.
    Stop whining. BUILD what you need. Or go dying.

  15. Pushmi-Pullyu says:

    “The single largest drawback to electrification to us as OEMs is that we’re no longer in control of the components side; all batteries will be made by others.”

    “It’s really a question of capacity and access to that capacity.”

    I suppose we should congratulate Mr. Marchionne for at least recognizing the limitation of battery cell production. All too many EV advocates posting comments to InsideEVs refuse to recognize that reality, for example claiming that GM can simply crank up production of the Bolt to whatever level it wants.

    However, it’s sad that Mr. Marchionne fails to see the obvious solution, which is for auto makers to partner with existing battery manufacturers to build high-capacity factories which the auto maker controls, so the auto maker can decide for itself how many — or how few — batteries it wants to get in a year.

    Nissan figured that out. Tesla figured that out. BYD didn’t have to figure that out, because it was a battery maker before it was an auto maker.

    Various other large auto makers, such as Ford and Volkswagen, are openly discussing plans for building their own battery factories. Why is it that Mr. Marchionne is blind to this solution?

  16. DJ says:

    Every time I hear Serg speak I have to admit that I throw up in my mouth a little. The guy is such a douche.

  17. Zensible says:

    As a Business professional, it is his job to consider the fact that until recently, nobody was buying these vehicles and precious few are buying them today. Also the companies who are currently building them are losing money on every one (or at best, breaking even in Tesla’s case). Yet FCA is still investing in the technology because it is assumed it will be a large part of the future. So come down off your high environmental horses and give them some credit for risking resources on the so-far empty assertion that the public will gladly buy EVs if only someone would make them. In 2015, Ford sold more F150 trucks than all the EVs, PHEVs and light-commercial electric vehicles combined….WORLD-WIDE (180,500). FCA isn’t the only company hesitant to spend hundreds of millions to tool up production until they see a possible return on it.

  18. Asoue says:

    We’re all pretty sick of your complaints, Marchionne. Shut up, you visionless hack of a CEO. This bubble you live in is called the past. Step aside, grandpa. Time for the new generation to lead. Dinosaur trash.

  19. mklcolvin says:

    Actually, who cares about what Sergio has to say about EVs – until he starts making EVs…

  20. Priusmaniac says:

    When horse carriage morphed into ice cars, the strategic component to have was the ice. When ice cars morph into ev cars the strategic component to have is the battery. Nothing new under the sun here, just a change in what the strategic component is.

  21. Victoria Sampah says:

    I have too many complaints to make. This 2015 Chrysler 200 has been a headache and a burden on my family. If this is a real platform that reaches the CEO. Please do something. Dealer sold me a deffective vehicle, refuses to trade in , sent in for several recalls. Recalls fix caused engine to stall and shift and vehicle races when started in the morning. The stall and shift causing an accident in 2016. My insurance company will not fix any engine problem because they believe the vehicle has a pre-existing problem that caused the accident. I need a solution to this from CEO
    Case Ref # 30914002 – Fazlur

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