How Will Marchionne’s Tardiness Impact FCA’s Electric Future? – Part 2

JUL 7 2018 BY CARLO OMBELLO 12

Marchionne is last to join the EV bandwagon, but can Fiat still compete? (Part 2)

[Follows from Part 1]

The Future Vs Marchionne

June 2018: methane may not be Fiat’s new technological focus after all. Also, improving traditional Diesel engines is ultimately not feasible, so those will instead be fully scrapped by 2021. The much-derided electrification now lies at the core of the new industrial plan 2018-2022. Fiat’s new agenda announced in Turin means billions will be spent on introducing all kinds of hybrids – from mild to plug-in – and even pure evil, pure battery electric cars. While the hypocrisy of this U-turn is exceptionally striking, both in environmental and financial terms, perhaps we should appreciate Marchionne’s pragmatic attitude, as he is forced to act by the “adapt-or-die” situation the laggard Chief has found himself into. So what’s in store exactly? Among the various brands that fall under FCA, Fiat and Jeep look set for the most substantial changes.

*This article originally appeared on opportunity:energy. Author Carlo Ombello graciously shared it with InsideEVs.

Fiat 500 and its derivates will receive a mild hybrid version, while the new 500 slated for 2020 will also be introduced as full electric in two variants, standard body and the spacious “Giardiniera”. All Jeep models will have a plug-in hybrid version by 2022, with a fully electric model – The Grand Commander – available in China only. No details are yet known about how this electrification effort will affect Alfa Romeo and Ferrari, but there is clarity on Maserati. The luxury brand, which can be seen as a closer competitor to the likes of Porsche or Tesla, will get plug-in versions of the Quattroporte four-door sedan and the Levante SUV, and crucially there will be space for a fully electric version of the new coupe Alfieri.

Despite the somewhat vague details, the new plan does show a double approach to electric cars that could prove sensible, profitable even. Let’s take Maserati: high price, low volume brands have always been the best placed for early electrification, thanks to their niche nature and high profitability. It’s safe to say that if Marchionne has done well so far with FCA, he can also turn Maserati into an attractive EV brand, while exploiting commoditization of batteries and EV technology to turn a profit on high-end models.

Less obvious is the choice of approaching battery electric cars from the bottom up with the Fiat brand. Low price, high volume models are in fact the last missing link in mainstream adoption of electric cars. Current “base” EVs are still medium-sized cars around the €30-40k mark, something that particularly in Europe is proving a high entry barrier for many. Offering small and cheap-ish (€20-25k?) EVs would certainly attract far more customers and open up entirely new markets, particularly if done via highly recognizable and attractive models such as the 500 family, which also command better profits. Marchionne has been adamant in his fear of commoditization of the car market, as he pointed out in January this year at Detroit’s North American International Auto Show: “Auto companies need to quickly separate the stuff that will be swallowed by commodity from the brand stuff”. For once, it’s hard to argue with his thinking, particularly with China’s might finally looming over the global car industry and setting the pace of technological innovation.

FCA’s industrial plan is shaped after this concept: Fiat with its 500 models (a sub-brand in their own right) and Jeep with its history and popular range of utility vehicles are ideal for electrification – full and hybrid – without falling into the trap of low price competition with other manufacturers. The models that won’t fall easily in these categories will eventually be abandoned. In a Bloomberg interview from last January, Marchionne admits:

If you provide basic transportation, it is like buying a generic phone. […] There is part of the FCA portfolio in that field. The brand that’s most vulnerable to commoditization is Fiat itself. I think we can protect it as long as we stick to the 500 and the Sport 500 families, while bread-and-butter sedans that compete with PSA Group’s Opel and Peugeot brands may face a harder road in the long run.

The road is finally set, and previous beliefs apparently forsaken. As the CEO gets his head out of the sand, Fiat Chrysler is joining the struggle for self-reinvention of many legacy automakers. Marchionne is hardly the best man to fulfill Fiat’s electric destiny, but as a smart, pragmatic Chief he has, at last, come up with a credible, if very late, plan of action to recover lost ground in the EV space. A crucial next couple of years will be enough to tell us if the outspoken financial guru, who revived not one but two car companies, can survive the ultimate challenge.

Source: opportunity:energy

Categories: Chrysler, Fiat

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12 Comments on "How Will Marchionne’s Tardiness Impact FCA’s Electric Future? – Part 2"

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EVShopper

Fiat should partner with Mazda to do an all-electric Fiat 124 Spyder. No one has an affordable all-electric Roadster.

antrik
EVShopper

Does not appear to be in actual production. And $50k fails my “affordable” test. My ICE Pontiac Solstice GXP with 0-60 of about 5seconds cost me about $20K. I’m willing to pay a bit of a premium to replace it for an all-electric roadster, but not a $30k premium.

antrik

What makes you think a Fiat+Mazda offering would be more affordable than that? (Or come to market sooner?)

ffbj

From the article:
“It’s safe to say that if Marchionne has done well so far with FCA, he can also turn Maserati into an attractive EV brand.”
Is it really? I think going top-down ala Tesla is a good idea, but while Sergio’s career as a magician, though impressive, his old tricks just don’t work anymore. Too late to the party.
They are going to stop making diesels in 2021. Will anyone even buy one by then?
VW has millions of them they can’t sell or that are being recalled, so they can be fixed which kills the power band of the car.
Diesel is dying, and that’s being generous.
https://www.theguardian.com/money/2017/jul/12/drivers-loss-of-power-vw-emissions-fix-class-action

Carlo Ombello

The European market is still very diesel friendly actually, with 58% market share in Italy (!!!) and above half market in other nations. So it will fall but not die on its own by 2021. When they stop selling diesels, EVs will be automatically boosted, plus they will have become cheaper and charging infrastructure will be ready. The brands most reliant on diesel better electrify asap or die. The most innovative ones will boom.

ffbj

Nice article, btw, I think you did a good job on it. Clearly, mores the pity, diesel is deeply entrenched on the continent, but less so elsewhere, sad to say they were totally hornswoggled by the European car industry and their clean diesel story.

Assaf

I like the dismantling of Marchionne’s rhetoric and lack of public self-awareness. But regarding the current state of the market, this statement:
“Current “base” EVs are still medium-sized cars around the €30-40k mark, something that particularly in Europe is proving a high entry barrier for many. ”

Is downright wrong. The ZOE is small, and its price in, e.g., France, starts at ~15k euro after incentives. The Leaf too, is offered in England starting 25k pounds, seemingly *before* incentives. I’m pretty sure the Ioniq BEV is selling affordably as well.

So dear Sergio will have to wade into a busy market, and show some serious competitiveness to get anywhere.

Carlo Ombello

Zoe’s base price is €33,800 in Italy, where there also are no incentives. You can get it for €25,800 by leasing the battery, which then leaves you with an additional monthly lease. EVs for €20-25k all-in before incentives are still to be seen unfortunately!

EVShopper

If the focus is on electrifying real SUVs and trucks, then FCA is not late. No one has really entered that market, yet. And FCA has the Pacifica Hybrid (PHEV) which is alone in it’s class.

Carlo Ombello

Indeed there are clearly still opportunities around for late comers, which is why I don’t dismiss Fiat’s new efforts outright. They have a limited window of time to act though, and while Marchionne is clearly the most anti-EV CEO known to man, he’s also unafraid to hypocritically follow the industry into electrification.

101101

Like to see every last one of these companies do BEV buses of various sizes completely covered in PV cells. Also insist on charging structures by providing building roof top cells and facility batteries to charge the buses to make sure petrol power and finance is completely cut out of the loop.