Fiat CEO on 500e: “I Hope You Don’t Buy It” – We Lose 14k A Sale


MAY 22 2014 BY JAY COLE 75

Apparently Fiat is immune to the forces of scale and decreasing battery prices when it comes to the profit margin on their popular 500e plug-in car.

Fiats CEO Says The 500e Costs About $50,000 Per Unit To Build, Sells From $32,300

Fiats CEO Says The 500e Costs About $50,000 Per Unit To Build, Sells From $32,300

While speaking at the Brookings Institution panel in Washington this week, Fiat CEO Sergio Marchionne decided to his update his previous statement from 2 years ago that Fiat will lose $10,000 on each electric car they sell.

You can now make that $14,000 – and the Fiatsler boss thanks you for not buying one.

“I hope you don’t buy it, because every time I sell one, it costs me $14,000.”

And while Fiat has a corporate policy about not disclosing production and sales on the 500e, a recent full model recall for possible power loss (all build dates through April 4, 2014), does put an exact number on the units built so far – 4,151 units.

Meaning that if you believe Mr. Marchionne’s figures, Fiat has lost $58,114,000 so far on the 500e…and counting.

As a point of interest:  Mitsubishi Motors USA (who often in the past has had to root around their couch just to pay the bills) says they can turn a profit on the i-MiEV, a vehicle that starts at $22,995 (USD) … and is imported from Japan

Detroit News

Categories: Fiat

Tags: , , ,

Leave a Reply

75 Comments on "Fiat CEO on 500e: “I Hope You Don’t Buy It” – We Lose 14k A Sale"

newest oldest most voted

Makes me want to buy a whole fleet of them.


He sounds like a Honda salesman that I dealt with many years ago that said he was losing money on the deal and walked away from me. So got up and headed for the door. His manager stopped me and offered the Accord for $400 less. I kept walking and bought elsewhere.

Judging by the number of great 500e commercials I’ve seed during the 11pm news here in So Cal, I think he’s bluffing and is trying to generate more interest.


Seriously . . . if the $14K really came out of his pocket, I’d buy one tomorrow. 😉

me too for real. i do like that stubby little car for some reason.

How much is BMW losing?

On the i3? Nothing, it’s profitable.

[citation needed]


So,roughly speaking, it cost Fiat the same amount to make a 500e as it does Tesla to make a Model S 60.

It is laughable when people say that once BEVs become a sizable established market the major OEMs will blow Tesla out of the water.

The truth is nobody is making money selling EVs. This isn’t good overall for the future of the EV marketplace. Battery tech and larger volumes may change things. Tesla is not making money selling EVs nor is GM or Ford. They are trying the market out to see if it will grow.

I think the terms “profit” and “loss” in this situation all depends on what light an automaker is looking at a product.

If they are not keen on it (or have no long term plans), they will take the start-up R&D cost and just divide that by the number by the production run…add that figure to the actually manufacturing and marketing costs and “tada” – big losses.

If an OEM is using that plug-in platform longterm and/or is intending on building a brand based on it, then those R&D costs are then amortized over the lifetime value.

Some are “trying”, some are not. not really

I think the truth is product development actually costs money, and if you want to keep share you actually have to spend it. -Long term business models. What a concept?

Fiat did not deserve Chrysler, as a bidder. You should know the favor they were extended by the U.S. government. The thanks a guy like Marchionne gives back?

I wonder how much it costs to take an existing car, remove the drivetrain and put whatever size battery will fit along with a small electric motor, inverter and gearbox?

There are firms doing conversions now – but not cheaply. $15-20K for various VW models as well as even pick-up trucks. Conversion kits do exist but “you’re on your own” in terms of warranty and other things. This is not a consumer solution for EVs. Converting a Toyota Camry worth $10k to a nice 100-mile EV is possible but then the cost is over $25K. Just buy a Leaf made explicitly for the EV purpose.

I think Big Solar’s question may have been directed at the price quote, not the consumer solution. I still remember the (sponsored) CBO study, suggesting the Volt’s cost premium was “$19,000”. Never mind the government doesn’t have this information from manufacturers. It’s the message some want to send.

Tesla has something like a 25% profit margin on the model S. But because they are in growth mode, they are re-investing the profits to build out their worldwide supercharging network, and their service centers and stores (or “galleries” in red states who’ve made it illegal for them to sell direct). So yes it looks like they are losing money because they aren’t showing a profit at the end of each quarter, but once the infrastructure build out is complete and they start mass producing their gen3 car, they will be, I promise you.

Not profit by any accounting standard. More like gross margin between the the costs of production and the selling price. Account for R&D and sales expense and everything else and the cars aren’t profitable. It might cost Microsoft $.50 to create an Office DVD but that’s not what it costs.

See Jay’s comment above re how you can generate a loss or a profit on EVs depending on how you look at it.

C’mon DonC, you know the car is very profitable for them (not the 25% gross margin of course). They are just marginally profitable or marginally unprofitable depending how you account for their sales with a guaranteed buyback. Clearly, if you deduct out their development expenses for the X, Gigafactory, new facilities, Supercahargers, and sales infrastructure to support larger volumes with X (and car formerly known as E) the S is very profitable. That’s not taking out the Superchargers, sales studios and service centers that would be built anyway needed to support S sales. Similarly, updating the existing line for S growth can be accounted to the S but adding the second line is neede for the X.

” (or “galleries” in red states who’ve made it illegal for them to sell direct)”

New Jersey and New York are not red states.

Just for the record, New York still has and will continue to have Tesla stores, not galleries.

New Jersey on the other hand….

Bonaire: “Tesla is not making money selling EVs”. With all due respect, Tesla is making money selling EV’s, unless Tesla is lying to the Securities and Exchange Commision. Last quarter, Tesla reported 25.4% Gross Margins, which means they are selling Model S’s for 25.4% more than it costs to build them. That being said, this number doesn’t include R&D and fixed plant expenses, office overhead, etc, so Tesla as a company is still not making money.

From Investopedia:

The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations. Gross Margin % = (Revenue – Cost of Goods Sold)/Revenue

Dr. Kenneth Noisewater

Indeed, the marginal cost to build the Volt has been estimated to be in the $26k range, so the gross margin on a Volt could be in the 50% range. Therefore, GM should be building and selling as many as they can to amortize whatever they have left of the tooling and R&D costs held over from Motors Liquidation Co.

Jim, you’re confusing marginal costs with average costs. There are lots of costs which don’t show up in the former but do in the later. Yes Tesla sells the Model S for more than the marginal costs to produce one, but that margin multiplied by the number of units sold is not remotely covering average much less long term average costs.

In the context of “please don’t buy any”, he is making it seem like Fiat loses money on a marginal cost basis, where Tesla clearly makes a profit on a marginal basis.

That is not to say I fully trust what the CEO is saying, as he clearly had an agenda here. I am sure he piled every single cost he could find on top of that number.

It is ironic that they made polorizing TV ads for a car they didn’t want to sell.

Pretty much what you said. My personal opinion is that he needs to stop the whining. He’s really good at it but it’s not helping in this instance.

Thanks for pointing out the fundamental difference between Fiat and Tesla: negative vs positive margin on each marginal sale.

How is “no one making money selling EVs” true? Wouldn’t a company like Tesla just dissolve if they weren’t making money? They don’t have any ICE models to fall back upon.

Your statement must be false.

No, they can continue burning investor money. They burned investor cash for like 10 years before breaking even.

Bonaire, I like you, I really do. Your posts over at GM-Volt are entertaining and enlightening…until you get on your lackluster marketing performance rant on the surging Global Electric Fueled Vehicle Industry. I have no idea what you are talking about. Citations- 1) WSJ -Navigant Research- Nearly 22 Million Electric Vehicles Will Be Sold from 2012 to 2020, Forecasts Navigant Research” Link Goes To WSJ Story- 2) “Electric Vehicle Charging Equipment Sales to Reach 4.3 Million Units Worldwide in 2022, Forecasts Navigant Research” (Ed: That’s a boatload of Electric Fueled Vehicle Filling Stations!) Link Goes To Yahoo News Story- 3) In just 30 short months since the Chevy Volt EREV and Nissan LEAF, the point guys for the Global Electric Fueled Vehicle Industry left limited beta sales and rolled out Nationally and globally, passing over 205,000 sold in just the USA! Link Goes To Plug In America EFV Ticker- 4)Bottom line- Build in house with long established technology or pay a heavy price to outsource the technology. Toyota, Hyundai and Fiat are the big Fail at this point. Never developing the legacy in house technology to field a viable product they are left to pay to play… Read more »

Bonaire, Tesla’s gross margins are already 25 % and they approaching 30 %. Tesla is making more money by selling electric cars than Porsche is making by selling ICE cars!

The point is that Tesla uses all their gross profits into expansion. They do not issue dividends for the owners. Tesla is growing at tremendous pace by 50 % per year! This eats huge amounts of capital.

Also Tesla needs several gigafactories that costs four billion each. And these are only for batteries. Car manufacturing is more capital intensive than battery manufacturing!

Even Sergio knows Tesla is making money selling EVs.

They invest those profits plus capital raised outside the company on expansion.

They have unrealized profits going into a reserve for their residual value guarantee.

That is why Tesla shows a net GAAP loss but they have an operating margin over 25%.

You know this Bonaire.

Yeah, TMC is making money on EVs. Their relentless product development and manufacturing ramp-ups are keeping them in the red from a GAAP point of view. If they just stopped here, they would be profitable overall.

They do not have to build an electric vehicle, they can buy credits from Tesla instead.

Then they can watch their market share drop when they realize they desperately needed to know how to build quality hybrid and electric vehicles. That isn’t exactly the Chrysler or Fiat strong suit. Here’s to fading into irrelevance.

+10. Either you believe in EVs or you don’t. If you do, you take the long term view.

for sure.

Exactly. If they continue to ignore EVs then all the other automakers will snap up all the patentable ideas. Fiatsler will be forced to license patents from the other automakers then when they inevitably have to build EVs due to strong customer demand.

It is short-sighted stupidity. The Obama administration car czar wanted GM to kill the Volt program but GM’s management insisted that it be kept because they know that technology is their future. And they’ll be proven right in due time.

When I read his quote, my reaction was this CEO needs to go. Every CEO should want to sell his products and should be working to make them as profitable as possible. He should never hope you don’t buy what his company is selling.

Fiat should think about how much more profitable it will be if it does not have to pay him (about $2.8 million according to Forbes).

As I keep saying over and over here and elsewhere, this will all work itself out. Currently we have a very few companies that are serious about EVs. And we have a larger group of companies that are greenwashing, collecting compliance credits, etc., and generally hoping for hydrogen-powered flying unicorns to save their sorry backsides. One company, VW, seems to have moved to the former group from the latter, but we won’t know for sure for a little while longer. But if you look at the EPA regs for the next decade, which require a fleet average of over 50 MPG, it’s clear that cars with plugs will have to play a major role for every company selling vehicles in the US. Assuming battery prices keep falling (a very safe assumption, IMO), this will create a new dichotomy in the motor vehicle market: Small cars will largely be EVs, larger ones mostly PHEVs. I simply don’t comprehend the point of companies being so openly hostile towards EVs in 2014, whether it’s this bizarro world statement from Fiat, Toyota’s absurd EV-bashing ad, Honda canceling the Fit EV, etc. I am absolutely sure that every car company on the planet with a… Read more »

You can actually use this logic to sell people on EV’s.

My brother in law just bot a new Ford F150 truck and made some snide comment about my Volt like: “I heard they don’t make a penny selling that car.”

I said:

“Ford thanks you you sucker. They make $10,000 on every pick ’em up truck they sell. Thanks for your contribution.”

You get the bang for your buck buying a Volt.

He was speaking at the ultra-conservative Brookings Institute, a “think tank” (i.e. lobbying PR firm) that is opposed to all government regulations. Obviously he’s looking for an ally in trying to kill CARB. I wonder how much money he lost (donated) to that cause?

You must not have been to Brookings. I think you have this institution confused with one of the other two on Mass Ave.

Fiat has been a really bad brand with poor reputation and quality in Europe and South America. I wouldn’t buy a Fiat ICE, even less an EV that the CEO hates. What quality buyers expect?

Marchionne never wanted to build an EV in the first place, and was forced to by CA rules.

Also, Fiat had little ‘development’ to do with the 500e since Bosch provides the ‘complete’ drivetrain for the 500e including electric motors, power electronics, batteries, and regenerative braking, etc.

Fiat just provides the car shell.

But adding an electric drivetrain to an already low volume vehicle with with low profit margin does not help their situation.

In the US Fiat 500 overall only sold 35k units for 2013, and sales are down 13k units YTD.

Outsourcing to Bosch was probably extremely expensive and part of the reason for their big fail.

Marchionne is absolutely right. Besides, nobody should be forced to do something, or sell something, below the market price. If I were forced to work for someone below the free market price, it would be classified as some sort of slavery. If I owned a pizzeria, I wouldn’t want to be forced to sell a $10 pizza for $5.

Nobody tells you what the price needs to be. If you have to charge $10, but the pizzeria next door can sell it for $5, then you go out of business. That’s competition in a free market.

And what do you think would happen if Fiat tried to sell its EV for $50,000? Ask Toyota.

Like I said, either you meet your competition head-on or you go out of (the EV) business. As was mentioned above, they could just buy credits from Tesla or Nissan.

The alternative is produce a compelling product that is actually worth $50k. Tesla is making money by charging $70k+ for their EVs. People buy them because they are worth the money.

Then, they have to find how to make profitable 30k$ EV. Which is much needed.
This is call ingeniousity.
Work better an harder and stop complaining about the market.
Not sayins it’s easy, but it’ the only way to go.

Ingeniousity – I learned a new word! I find it amusing how the English language evolves to incorporate words that people essentially make up.

This does not sound very convincing and this feels little bit misleading.

My guess is that the loss is primarily due to relatively high R&D spendings and very low volumes of production.

There might also be that due to low volumes of production, production capacity of factory is not optimally used. Therefore capital costs for low volumes of 500e production are too high.

But as this is a compliance car, Fiat of course does not expect it to be profitable!

You guys shouldn’t forget that they can’t make as much money on service with an e-car. Actually far from it. So that has to be calculated in as well.

Fiat has been known for using clutches, break pads and so which last even shorter than on other cars.

Sergio Marchionne is such a wanker.

Well if you outsource your electric drivetrain design to Bosch, build only a few hundred of them, and already have had 2 recalls . . . then of course you are going to lose money. But if you competently design an EV and sell them in the thousands, you won’t lose money.

But hey . . . why would you want to do that? It is not like gasoline and diesel vehicles are dependent on a finite commodity which is in high demand and is literally burned up when used such that its price will forever rise upward, right? Good plan. Wanker.

So Tesla is a stock scam, and Nissan is just subsidizing the EV industry. We are headed for a replay of the hybrid revolution, that is, a car the US makers said was impractical and only fed on a diet of commuter lane stickers, until it started to eat the US makers’ lunch. I was very interested in the 500E until I talked to a dealer. They clearly weren’t serious and I gave them a pass to buy a leaf. I am so glad I did. I am for phasing out compliance cars. The mandates had a use, but that has passed. Let the car makers fall into ranks of those who do and do not back new technologies. Then let the market punish those who are wrong. California has a right to limit how much toxic waste people and car makers can dump into the air here. However, I don’t agree that things like MPG standards or ZEV mandates are the governments’ purview. If people want to waste money because they are stupid, let them. And a ZEV mandate makes less sense, and has less effect, than lower and lower standards for net pollution per mile, eventually going to… Read more »

Oh and no pollution “offsets” or “carbon cap and trade”. That is such a lame scam.

The man who knows nothing about solar also knows nothing about business it seems.

No, Tesla is not a stock scam. Nor are the thousands of little start-ups in Silicon Valley. They all lose money initially as they build toward a profitable business. All those Supercharger stations are not free to build. All those molds & presses used to build Tesla parts are not free.

“California has a right to limit how much toxic waste people and car makers can dump into the air here. However, I don’t agree that things like MPG standards or ZEV mandates are the governments’ purview.”

Those statements contradict each other. The latter is just the way they decided to achieve the former. Just because you don’t like the technique they selected, that doesn’t make it wrong or bad.

You charmer.

You completely misread my post, as usual.

As usual? Please tell me how it is impossible to turn a grid-tied solar PV installation to one with batteries or even off-grid.

TWO NORWEGIANS from Minnesota went fishing in Canada. They caught one fish. When they got back, one of the Norwegians said,

“The way I figure our expenses, that fish cost us $400.”

“Well,” said the other Norwegian, “at that price, it’s a good ting we didn’t catch any more.”

No wonder Th!nk went bankrupt. 😉

(From a Norwegian-American)

Too funny. Nice.

Hi there,

“I Hope You Don’t Buy It – We Lose 14k A Sale”.
Give me a break!! Phatetic!!
All Fiat are 25% too expensive!!! And more with the small little toy 500!!!
I think he means “We don’t make 14k profit like some ICE!!”
He should call Elon for some advise!!

Good road with Tesla. What else? Nothing!!

The 500e has a starting price of $33K, and Sergio claims he loses $14K per car. That means it supposedly costs him $47K dollars to build each 500e. The Tesla Model S has a starting price of $70K, and Tesla documents with hard numbers a 25% margin, meaning it costs Tesla roughly around $55K or so to build one. If we believe Sergio’s numbers, he is saying that the brand new start up Tesla, can build a WAY better car, for around $8K more than it costs Sergio to build the 500e. If he is tired of losing money building 500e’s, he should spend the extra $8K to build a Model S competitor, and sell it for what it costs to build, and undercut Tesla’s price by 25%. Instantly he would stop losing money, and earn more ZEV credits per car, so he would have to sell fewer. They only need to sell a very small volume to meet their ZEV mandate, so there should be no problem finding enough folks to buy them if they do an even halfway competent job (considering the Model S now is wait-listed until September here in the US). If he really is losing… Read more »

Yeah, he is just being a cry-baby trying to get out of rules. Forget it, Serg. Build EVs, pay someone else for credits, or leave the California market. Your choice.

If you care about the long-term prospects of your company, you’d be wise to choose the first option. Have you noticed that Tesla has a bigger market cap than your sad Fiat/Chrysler corporation?

It is the automotive equivalent of soccer flop #11 from buzzfeed…

“Look how bad the darn govt hurt me!!”


Well, Segio… This just makes me want to flick my thumb off my front teeth at ye!

Lol, its definitely a “good” cause to buy a 500e then.

Tesla still remains the best company. Buying a Model S puts money into a company that wants to change the world for good and not just solely build up their bank account unlike every other car company.

hmmm … I like my 500e. But I don’t like hearing these words from the Fiat exec.

The dealership I got mine from has more electrics than other models of the 500 combined … and apparently they’re selling or leasing them quickly. This whole thing is just odd…

I saw a sign on a bus just now:

“the electric SUV you can rent”

Yes, the economics of these cars must be awful. Bet they lost a lot of money on that ad. Nobody has interest in EVs here.

[Note for spec9: this is called “sarcasm”. You can look it up it your weeedle dictionary]

So if the car is built and nobody is buying it, then the loss is even higher than $14K right?


I would think so.

I will take Sergio’s advice and not buy one, but for different reasons….

Building a novelty compliance car is a cynical ploy to avoid the zero emission intention and shows no commitment to electrification. Why support that ploy by purchasing a compliance car? No matter how appealing it may look, it is a regulation forced novelty build by a reluctant manufacturer that will not provide serious long term product support.

Far better to show support for electrification by purchasing a fully supported vehicle form an enlightened and committed manufacturer that sees the long term commercial benefits of electrification and comprehends the need for ZEV initiatives.