Fiat-Chrysler CEO Reverses Stance On Electrification Following Diesel Fall Out

4 months ago by Mark Kane 39

2017 Chrysler Pacifica Hybrid

2017 Chrysler Pacifica Hybrid

Sergio Marchionne, the CEO of Fiat Chrysler Automobiles (FCA), will redirect the company through electrification as diesel fades away.

Jeep Yuntu

There will be more hybrids, plug-in hybrids and all-electric models, as replacements for diesels throughout the FCA automotive group.

FCA currently offers two plug-ins in the U.S.:

  • all-electric Fiat 500e
  • plug-in hybrid Chrysler Pacifica Hybrid

Marchionne previously considered cost of developments of electrification too high, but emissions compliance has hit diesels hard, so he is now no longer in opposition. Per Ward’s Auto:

“Admitting he has reversed his stance on electrification, Marchionne tells media and analysts during the automaker’s second-quarter financial report his “aversion” to electrification was based on the development costs associated with the powertrains compared to other options, such as diesels.

“What makes it mandatory now is the fate of diesels,” Marchionne says, noting the rise in “anxiety” around diesels and emissions compliance, which ultimately will result in weaker support for diesel going forward.”

The Fiat 500e, despite being mostly a compliance vehicle for FCA, has been well received in California and Oregon, routinely selling ~500+ copies per month (see historical stats on every plug-in model sold in the US here)

There will be more plug-ins in FCA’s portfolio, but Marchionne warns that prices of cars could go up, so lets say he has begrudgingly accepted the electrification of the automobile at this point.

“Marchionne doesn’t specify a timetable for electrifying FCA’s portfolio, and he remains concerned about development costs and managing variable costs for key components such as batteries.

“If the cost of batteries doesn’t come down, there will be a huge increase in pricing in 2022 and that will cause shrinkage in demand,” he warns.”

Beside Fiat and Chrysler, FCA intends to introduce plug-in models through the Maserati brand as well.  Separately, Jeep probably will offer a plug-in hybrid model in China, as the 3-row concept Jeep Yuntu was unveiled in April.

Marchionne will step down as CEO at the end of 2018. Electrification will no doubt carry on in a more meaningful fashion at that time.

Source: WardsAuto

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39 responses to "Fiat-Chrysler CEO Reverses Stance On Electrification Following Diesel Fall Out"

  1. Assaf says:

    Don’t let that door hit you when you leave Sergio 😉

    1. Joshua Burstyn says:

      No kidding. Toodles…

      1. ffbj says:

        Toodles? Well that dates you a bit.

        1. ArkansasVolt says:

          ^^^ somebody doesnt watch mickey mouse clubhouse on disney jr

    2. Martin T. says:

      Sounds like a few car companies we know, looks like Dear Mr Marchionne has an awful lot of cream pie with crushed Italian nuts to wipe off. Did he really think producing his companies crap box heaps would see him in the future. The only one car (Coupe from Mazda) this is any decent from the FCA & even that is risky as the motor is supplied by Fiat for their version.
      Grab the pop corn and let the fun begin as Marchionne surges out the door in a cloud of diesel smoke, hot air and verbal ……..

  2. WadeTyhon says:

    “If the cost of batteries doesn’t come down, there will be a huge increase in pricing in 2022 and that will cause shrinkage in demand,” he warns.”

    Er, okay, well hasn’t the pricing come down hundreds of dollars / kWh since the early days of the leaf, volt and roadster? And are continuing to fall?

    “Marchionne will step down as CEO at the end of 2018. Electrification will no doubt carry on in a more meaningful fashion at that time.”

    I didn’t know that! Excellent to hear! Buh bye now!

    1. L'amata says:

      Judging by that $9000.00 option on the model 3 it looks as if prices didn’t budge ..that’s outrageous for a 90mile or Less increase.And now with the head guy quitting the Gigafactory who knows what’s going on.. .

      1. Mark.ca says:

        I think Tesla see the 25kWh battery as a package…that’s where they make their money. It doesn’t cost them $9k to make a 25kWh pack…if that was the case M3 pack of 70 kWh would cost $25k. This is Tesla saying “we think 220 miles of range is plenty but if you really want to show off then we got this option for you”. All their packages have huge markups but this one is just insane.

      2. Mint says:

        Come on, what does option price have to do with actual cost?

        Do you think navigation costs a lot because automakers charge $2000 for it? There’s maybe $50 hardware cost plus the cost of traffic data.

        1. speculawyer says:

          Yeah, think about improved sound systems. Who has $2000 of sound system in their home? Very few but we pay $2000 for premium sound systems in cars?

          But that’s the way the market is. Make your choices as you deem appropriate. I’m pretty judicious about options.

      3. EV4Life says:

        And yet the 310 mile Model 3 has the lowest cost per mile of range for any EV and is cheaper per mile than the short range version.

        1. Terawatt says:

          “And yet”..?

          It would be pretty hysterical if it were any different, considering that the battery pack is the only difference!

          To make it simple enough that I’m reasonably confident you understand why, consider the following: you look at a deal for an R/C car and one battery pack and compare it to getting the same car, from the same merchant, with two battery packs. You find that the price per battery pack is lower if you buy the bundle with two battery packs. Then you pay enthusiastically online about your discovery, starting with “and yet, the price per battery pack is lowest for the two-pack bundle”.

          If it was not, it would mean you could but two of the “car + 1 battery” bundle, and thus two cars and two packs for less than one car and two packs.

          I’m aware that the long range version doesn’t go twice as far as the standard range, but the logic is actually the same.

          The incremental cost is $100 per mile ($9000 for 90 miles), and that’s a lot when all it takes is more battery. Although they aren’t stating capacity it’s only about 25 kWh, and thus $360/kWh. That’s expensive.

      4. TomBrown says:

        The 220 mile version seems very reasonable EXCPET the slower supercharger times built in! These cars will need the superchargers more on long trips yet will be sitting there longer each time not just since it’s a smaller battery pack but because of this lower peak rate even under 80%.

        1. speculawyer says:

          That’s the raw physics of the situation. With a smaller battery you have less parallelization and thus you just can’t charge it as fast. It is not them trying to screw you.

          There’s a reason why only Tesla cars can do supercharging…they are the only ones to put big batteries in their cars.

      5. speculawyer says:

        ” that $9000.00 option on the model 3 it looks as if prices didn’t budge ..that’s outrageous for a 90mile or Less increase.”

        I’m tired of these whines. Tesla is building the cheapest long range EV on the planet at $35K for 220 miles. If you think the $9000 for 310 miles isn’t worth it then don’t get it. But good luck trying to find a cheaper 310 mile range EV from ANYONE else!

        This is like the Louis CK bit about airplane Wi-Fi:

  3. William says:

    Hey hey, hoe hoe, Sergio has got to go!
    Thanks for the 500e, without fast/quick charge.

  4. speculawyer says:

    “If the cost of batteries doesn’t come down, there will be a huge increase in pricing in 2022 and that will cause shrinkage in demand,” he warns.”

    Wow…its almost as if the really smart thing for an automaker CEO to do would have been to build a massive battery factory so you can efficiently manufacture your own supply of batteries!

    1. unlucky says:

      Yeah. The comment seemed to me like the kind of comment you’d get from a CEO who studiously avoided making any kind of preparations for producing BEVs. If it happens, it’s because you made it happen through your own (in)action, not because it was unavoidable.

  5. Mil says:

    No s***, Sergio. Every Tom, Dick and Harry could see this happening. What a ******** to only realise this now.

  6. Someone out there says:

    “If the cost of batteries doesn’t come down”

    It’s coming down for everyone else. If Sergio doesn’t see any of that maybe he should fire the guy responsible for negotiations or step down himself.

    1. Someone out there says:

      I didn’t read the full story, apparently he is stepping down! Maybe they can find someone that is better at negotiating with suppliers then.

  7. Just_Chris says:

    In my opinion Fiat-Chrysler are in a serious bit of bother. They backed the wrong horse and now they are left standing around looking stupid. I honestly believe that Sergio and his management team should be charged with negligence. They knew the 2020 vehicle emission standard was coming in the EU and they have done what? nothing, pretty much every other EU based car maker has a whole list of hybrids, PHEV’s and a few pure electric vehicles what do Fiat-Chrysler have? I know they have one of the lowest CO2 emissions from their new car fleet but they don’t, as far as I see it, have any plan to meet the new emissions standard.

    1. ffbj says:

      Chickens do come home to roost.

  8. menorman says:

    If he’s serious, then they’ll start by taking the 500e nationwide immediately.

    1. He could start now with training 1 new dealership on the 500e in each of the rest of the states, per Month, for the next 4-16 Months, and let them order the 500e after they are trained!

      They could learn How to sell them, by asking buyers, EV Owners, and by hiring a ‘Secret Shopper’ service, of people’looking to buy an EV’ exercise, and take the report seriously to heart! Then make sure Dealerships with their name are serious about selling EV’s!

      (They will not go out of their way to make EV’s seem bad choices, block their EVSE’s, etc., if they WANT to sell EV’s)

    2. unlucky says:

      They lose too much on it to want to do that.

      It’s not a very good EV. It only sells well because it’s real cheap. And that’s a problem when you’re the one taking in the money.

    3. speculawyer says:

      I love the Fiat 500e but at this point it is obsolete and a bit of kludge. The battery is too small and they never put DC fast-charging in it.

  9. M3 - reserved; Niro - TBD says:

    Pacifica looks like a winner if they can get past the recall hiccup.

    I love the 500e lease and fun coming to an end next year. Family outgrowing the size and need larger car now — Model 3 on deck.

    Would be great to see a crossover

    1. speculawyer says:

      Yeah but they seem to have decided to ONLY market it in California.

      Most people don’t know the PHEV version exists. And it might not sell well because people love Stow & Go and to fit the battery, they had to get rid of stow & go seats.

      I think the Pacifica PHEV is nice but sadly it looks like it is going to be invisible to most consumers.

  10. Jake Brake says:

    In all fairness, they are getting screwed on the 500e battery, $25k and its an old POS. The pacifica is a different game, they will crank those out as soon as the teething problems from a totally new powertrain are sorted out.

    1. pjwood1 says:

      The “dental appointment” has already been too damn long.

  11. Bill Howland says:

    If this story is for real then it means plenty of changes at RAM also – seeing as until recently they were pretty heavy into Diesels…..

    Imagine if all those diesel pickups were now electrified.

    1. wavelet says:

      The diesels Sergio is referring to are for the most part the passenger-car diesels, not the ones for actual commercial trucks. They’re non-existent in the US, but 50% of the market in Europe.

  12. ffbj says:

    The diesel fix that VW has promised does not work. Vehicles that have gone through the process are not markedly improved.
    While in the GDR an emergency summit was held to try and save diesel, where the various makers pledge to fix all the diesel’s.
    Probably with the same ineffective solution.

    The only real solution is to get rid on them in their entirety.

    1. pjwood1 says:

      If I understand it right, the latest is big news in Europe. I’m not sure how many understand how the U.S. caught VW for not disclosing alternative emissions controls (an AECD), while VW Europe only had to “pass the test”.

      The lack of legal leverage, post-September 2015, just changed as municipalities are exercising their own power to test and point the finger at why they’re failing to meet air quality targets. The buck stops on millions of German cars. Keeping in mind we were only talking about .5 million in the U.S., it puts the confidence crisis in Europe in perspective.

      I wonder how quickly urea re-fills and particulate filter changes will become?

      1. john Doe says:

        At all the gas stations there is Ad blue pumps for trucks. Normally cars get a refill when they’re at an oil change.
        Patricle filters works OK for people driving an average distans and those that drive a lot. Others that drive very little will have problems with particle filters (unless they once a week take their car on the highway to get really warm. Ford and others had problems with their filters. The mechanics took the car for a long testdrive, and many got OK again. The rest have to pay for a new filter.
        Don’t get me started on EGR valves.. and dual mass flywheels. Normal driving works OK, but if your car is running on idle a LOT like some work cars – you are in a world that hurts. EGR valves clog up, and the the dual mass flywheel springs and gliders wear out. . and of course the particle filter have to be replaced fairly frequently.

        On top of this, researches have discovered that gasoline engines that use direct injection emmit serious amounts of particles (much more then diesel engines), and a type that is smaller and gets deeper in the lungs of people.. so now they have to be fitted with filters as well. Those particles cause cancer.

        I’m not sure why FIAT does noe disclose that they have prototypes running on a shared EV platform. They bought the equipment just over 2 years ago. They are testing prototypes, and plan to order the rest of the equipment (used for production run with higher volumes) in the end of 2019 or early/mid 2020. Depending on how much resourses they put into the development and how successful the tests are going. They have booked winter testing in Sweden for the end of 2018 and again in February 2019. So unless they reduce funding, they will only be 1-2 years behind VW and others. But they’re not going for the same volumes. Equipment orders show that clearly.

  13. Terawatt says:

    I bet good old Sergio had/has a remuneration package that ties his personal pockets to the quarterly results of the corporation. Nothing can more effectively ensure that a CEO will avoid investing in the future at the expense of the quarters that determine his personal future.

    I also think he won’t personally suffer for a second from running the company into the gutters where it probably belongs anyway. Except possibly for some hurt pride, but you can hurt my pride a little as well for a few million bucks!

  14. Mister G says:

    Adios Amigo…now kiss Elon’s Lily white ARSE LOL

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