John Goreham's picture

Why Fiat's CEO saying "don't buy our electric cars" makes perfect sense

Fiat is not alone among the world’s leading automakers in thinking that EVs are not working out. Toyota feels the same way.

Fiat’s chairman, and respected automotive industry leader, Sergio Marchionne, has come out and said it. EVs are not working out the way many had hoped. If the leader of just one of the top five largest auto companies on Earth had the guts to do this it would be easy to say it is just one person’s opinion. However, there is the also the fact that Toyota is saying the same thing and more. Toyota is the largest automaker and the largest retail supplier of automobiles in America.

This week Mr. Marchionne offered up a plethora of excellent little quips. For example, Reuters reports that at an auto conference Wednesday he said with regard to the near micro-car, Fiat 500e (electric), "I hope you don't buy it because every time I sell one it costs me $14,000, I'm honest enough to tell you that." In case that wasn’t completely clear he also said "I will sell the (minimum) of what I need to sell and not one more. If we just build those vehicles, we'll be back asking ... in Washington for a second bailout because we'll be bankrupt.”

It is shame the numbers can’t work for the Fiat 500e. Patrick Rall, editor here at TN, is a person whose dally driver is a big powerful truck. He also keeps a (sort of secret) MOPAR monster that can run the quarter mile so fast it has to have its tires screwed to the rims to keep them from melting off at the bead when the car is launched. He loved the 500e and said about it “I think Fiat did a really nice job. I pushed it around Chrysler's test track pretty hard and it handled just as well as the normal 500.” If muscle car lovers enjoy the 500e, what do you think a person who is looking for an EV would think?

Fiat, owner of the Chrysler, SRT, Ram, and other former American “MOPAR” automakers, makes the 500e to comply with the California Air Resources Board (CARB) mandate. It forces automakers to produce and provide to customer a zero emissions vehicle if they want to sell the rest of the cars in California that 99% of the people in America want. CARB is similar to the US federal government’s EPA, and a few other agencies, all of which do pretty much the same thing in different degrees, except CARB "goes to eleven."

If you follow the news about electric vehicles (EVs) you know that Toyota has recently signaled in a variety of ways that it is not going to follow the pack down the road to electric vehicles as we know them. One way it signaled that was by cancelling its drivetrain contract with Tesla Motors for its only electric vehicle for sale to private parties in California, the RAV4 EV. The electric RAV4 is a money pit for Toyota, just like the Fiat 500e is for its maker.

There is one big difference between Toyota and Fiat saying that they don’t like EVs and are not planning to make more. Toyota is the company with the greenest passenger car fleet. It sells roughly a quarter million Prius vehicles each year in the US alone, and the fuel they save may even be more than the fuel saved by all the approximately 96,000 vehicles with a plug sold in the US last year. When compared to cars that use only electricity, the Prius is far and away the winner in the “Who saves more gasoline” contest. That is just one Toyota family hybrid model. It has hybrids in all shapes and sizes and earns about half the total hybrid business in the US. Toyota walks the walk.

Toyota also has an all-electric small Scion model it sells to municipalities and other such fleets. More impressive is the Prius Plug-in, which was the number two selling vehicle in the US least month that can be plugged in and then run on just that power to work or school. Only the Nissan Leaf, with its significantly larger taxpayer refunds and rebates can beat it.

Toyota is not interested in EVs because it thinks they don’t work for most people, and this month even ran advertisements for its Lexus line bashing EVs. However, it still has a plan to meet California’s mandates. And California is thrilled to offer hundreds of millions of dollars to support Toyota’s plan. That plan is to sell (soon) cars that run on only electricity with on-board fuel cells that use hydrogen as their energy media. EV fans and fanatics say that idea is stupid, which is exactly what everyone said about the Prius when it was introduced.

Subscribe to Torque News on YouTube.

Follow Torque News on YouTube, Twitter and Facebook.


It's almost impressive how much money Fiat manages to lose on each 500e. Worth pointing out: Mitsubishi says it can turn a profit on the $23,000 i-MiEV. As for Toyota...all I can do is give another exasperated sigh. Hydrogen just doesn't compare to EVs. I'm a firm believer that by the time fuel cell vehicles approach the current cost of electrics, and come up with the money to build enough refueling infrastructure to service even a fraction of the country, battery electric technology will have advanced far enough that EVs will no longer have any significant disadvantages.
Green Car Reports estimated (correctly I think) that the Toyota RAV4 EV uses $40K worth of drivetrain components for each vehicle. By my math, Toyota loses twice as much on each of those as Fiat does on the 500e. Do you think the Mitsubishi folks are being truthful about the profitability of a car they have sold 40 of in 2014?
Maybe not, but they sell far more globally. They crossed the 30,000 mark more than a year ago, although I couldn't find updated data in my brief search.
The Fiat 500e is a compliance car what were they expecting? If they were sold in larger number the unit cost would drop but seems they never figured it out.
The dealership I bought my 500e from seems to be selling 10 or so per week; I don't think they have any trouble moving them.
As we learned with the EV1, government mandate or regulation can push EVs only so far. All the companies who are making EV because they "have to" will not try to develop a good money making EVs. Elon Musk recognized this and said that only good commercial competition will drive companies to get serious about this. But seems that so far hasn't prompted at least Toyota and Fiat/Chrysler to do so. Their loss. Looks like BMW is making a better money making EV with a waiting list, like Tesla.
Let's make a very clear distinction - Fiat and Toyota (and Honda as well) are avoiding EVs because they WANT to, not because EVs aren't viable. Some OEMs have a culture that celebrates internal combustion as part and parcel of the concept of "car". Others are more open-minded. Nissan and Mitsubishi are doing very well with EVs simply because they want to. Chrysler and Toyota have just eliminated themselves from consideration the next time I need a new car, either EV or internal combustion. Toyota's announcement about developing fuel cells instead had me very confused. I agree with Luke O that FCEVs are very unlikely to catch up with EVs in cost and practicality. So if EVs are supposedly not ready for prime time yet, why would any company devote their time instead to another technology that is even farther from practical use? How can that possibly make sense? Now I have my answer - hundred$ of million$ in grants from CA. Always follow the money.
As a participant in the Humbold State University FCEV developement program of the 1990s, I disagree. Fuel Cell enabled EV generation is viable, as demonstrated by the Honda "Stack" FC. As detractors point to hydrogen refinement from fossil fuel as being redundent, boardering on the obsurd, I'd like to remind EV fans that Hydrogen can( cost) effectively be retrieved from trash dump or green bio-generated methane gas. And yes, these systems can be infinetly more effective when intigrated with brake co-generation. Yes Luke, battery technology will improve expotentialy as it has over the past 100 years. However, a standalone EV will allways be dependent on a 2nd party($) managed charge source.
I'm really not sure what you mean by a "2nd party managed charge source"?? As far as I know, most BEV charging is done at home, usually overnight. To me that seems a lot more convenient than going to a gas station. I'm looking at hydrogen cars and wondering why anybody would want one. What is the selling point? It looks like they only offer limitations and higher costs relative to gasoline cars. Meanwhile, I can buy a BEV today with blistering acceleration, free fast-charging at a network of stations across the country, and the ability to charge in my garage and start every morning with full range. Hydrogen cars, as far as I can see, are promising none of those things. It's not enough to say that hydrogen is technically "viable". You have to come up with something car buyers want, something they prefer over the available alternatives, and I don't see how that happens with hydrogen.
If I recall correctly, back in the EV1 days, FC vehicles were being developed, and there was even a FC station. So what happened? It seems that when CARB backed off on alternative energy, FC development disappeared. I predict that when again CARB reduces support of alternative energy, FC will disappear, and we would be back to ICE without EVs.
I read somewhere that Prius wasn't profitable until they had been selling them at least a decade. Until then they were basically losing money on each one.
In a way that is true of every totally new car if one factors in design and development and initial advertising. The Prius was a completely new vehicle when it was launched. Other than the low volume Lexus CT 200h that came in the third generation, there was nothing else that shared much with the Prius. The Fiat 500e and the RAV4 EV are different. In their ICE configurations they are both mature, high volume vehicles. However, when the electric drivetrain is added the cost literally doubles. The argument that "economies of scale" will bring the cost of a car down by 50% is not really valid. Even with the current taxpayer subsidies (arguably about $15,000 per car when ZEV credits are counted) these two cars cannot succeed at a break-even level for either manufacturer.