Fiat Chrysler Automobiles CEO Sergio Marchionne made some interesting comments during a frank and entertaining talk at the Brookings Institution yesterday, saying he hoped that no one bought the Fiat 500e, the well-received EV based on the adorable Italian car.

"I hope you don't buy it," said Marchionne, during a talk and question-and-answer session that focused on the aftermath of the automotive bailouts, "because every time I sell one, it costs me $14,000."

"I'm honest enough to tell you that I'll make the car, I'll make it available, which is my requirement. I'll sell the limit of what I'm required to sell and not one more," Marchionne said. "If we build just those vehicles, we'll be back in Steve [Rattner's] successor's office in Washington asking for a second bailout, because we'll be bankrupt by Christmas"

"From an economic standpoint, there's nobody out there that makes money on the electrification of vehicles, with the exception of Tesla, which only makes electric cars and sells them at a rather inordinate price," Marchionne said.

That $14,000 figure is a notable increase from the last time Marchionne complained about the costs of the 500e, when each car was merely being sold for a $10,000 loss.

Marchionne also made some comments on the future of electrification, saying, "It can't be done on pure electrification. It needs to be run in conjunction with combustion. Combustion still has a lot of unexplored areas."

We've embedded the entire podcast of yesterday's talk at Brookings below. You can hop in and listen to the nearly three-hour talk, or skip ahead to Marchionne's statements on EVs, which start at about 2:38:00.


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  • 134 Comments
      Tiago Nori
      • 7 Months Ago
      Tesla makes money because of its development. Sergio, your losing money because FCA didnt invested in eletrification, just take a bosch system and put on your 500, ohh how smart you are...
      Spec
      • 7 Months Ago
      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.
      tump
      • 7 Months Ago
      Make it an actual mass-produced vehicle and you'd be making your profit, dumbass.
      Card13
      • 7 Months Ago
      Panties are in a bunch because he's one of the few people speaking the truth. Newsflash: he's right. Automakers aren't making a profit from their electrics yet. I have no doubt that it will happen eventually, but the initial investment is so high and in order to get similar profit margins you have to price them out of reach. There was no benefit for him to invest heavily in this compliance car when that money could be routed to other longer term projects.
      Grendal
      • 7 Months Ago
      That's why it is called a compliance car. Marchionne is choosing to build only as many as he has to. If he invested a little more and really built them to sell then he'd be making a little on each one. The problem comes that efficiency and EV/hybrid will be more and more necessary in the future. It's hard to get a straight ICE to 60 MPG without some kind of batteries to help.
        Rotation
        • 7 Months Ago
        @Grendal
        Grendal, if I may be so bold, let me add to what you said in response to Larry Litmanen below. Given the response depth limits I'll put it here. Marchionne looked at EVs strictly as a way to not lose money, instead of to make money. As you say, he looked to limit the increased costs. One way is to make the car as cheaply as possible. That would mean spending up front money to make it cost-effective. You might even make it profitably at that point and then desire to sell as many as you can. Instead, Marchionne looked to limit costs. And he did so be eliminating nearly as many up-front costs as possible and instead outsourcing all the design and manufacture of the EV drivetrain. Doing this makes the EV drivetrain expensive, because Bosch puts the costs into the per-unit cost of the drivetrains. Once he did this, the next stop is to minimize how much you pay Bosch in per-unit costs by buying as few units as possible. That means making as few Fiat 500es as possible. And that's how he got here. His plan requires he minimize production and he certainly is going to follow through on it. I would vastly prefer he, like Nissan, Tesla or Chevy (with the Volt) do the design and engineering in house. At that point, all the development is sunk costs and you have incentive to sell more cars because you make more money (or at least lose a lot less) per car. This, at its core, is the reason why I, Grendal and plenty of others on here are upset with FIAT over how they've handled this. We may be more cavalier about actually making money (since it isn't ours), but we want to see commitment, because commitment will business models more conducive to companies wanting to sell EVs.
          Grendal
          • 7 Months Ago
          @Rotation
          Thank you for the detailed elaboration of the simplified point I was making. You missed the BMW on your list of companies that are willing to move forward with EVs. This half-@ssed attempt at an EV by Fiat will only position them badly in the future. Sure its cute, but how much support will you get from a company that didn't even want to make the car in the first place and is willing to say so openly? Well done, Rotation.
          Jon
          • 7 Months Ago
          @Rotation
          While Nissa and BMW put a lot more effort and in-house engineering into their EVs, their current offerings still smell like compliance cars. I'm waiting for them to make something with substantial range and that looks like a car the average customer would actual want to buy. Enough with the spaceship niche cars.
          Grendal
          • 7 Months Ago
          @Rotation
          Well reasoned. I agree it is unlikely that BMW will back down at this point. Over $2 billion in research toward EV tech would be an awful big compliance investment. The videos posted showing the production of the car indicated they weren't messing around either. But manufacturers have dropped new products before. You've done the research so I'll trust your instincts and maintain my skepticism.
          Rotation
          • 7 Months Ago
          @Rotation
          I don't have BMW on my list yet because BMW is only selling the i3 in a few states so far. BMW has to follow through on their promises before I add them to the list. I do believe they will, but for now, I'm holding back. I do freely admit that the amount of money and effort BMW has put into the i3 makes it seem quite unlikely they are treating EVs like FIAT and thus they likely will not restrict sales by location or artificially limit them to a number.
      knightrider_6
      • 7 Months Ago
      This is what happens when bean counter make all the decisions. You wouldn't see Tesla, GM, or Nissan whine about the electric cars.
        Ele Truk
        • 7 Months Ago
        @knightrider_6
        GM is the ORIGINAL manufacturer who whined about electric cars. Remember the EV-1?
        clquake
        • 7 Months Ago
        @knightrider_6
        At the into of the Volt, GM initially said they would lose money on each one they sold. I don't know if that is still the case, but you have to start somewhere.
          Ziv
          • 7 Months Ago
          @clquake
          Akerson was the only one to say that, I believe. Weber, Lutz and Boniface said they made a small profit on each Volt sold. Akerson appeared to be assigning the cost of the development of the Volt to the first 100,000 sold instead of a larger amount, apparently for tax reasons. So Akerson saw each Volt sold as costing almost $10,000 more than the actual cost of producing one Volt. But GM definitely makes less on every Volt sold than they do on Cruzes or Impalas.
      Jon
      • 7 Months Ago
      If Tesla can make money selling EV's and you (a major automaker) can't, you're doing it wrong.
        Brian P
        • 7 Months Ago
        @Jon
        Making a high-priced luxury vehicle that few people can afford is a whole different ballgame from making a mass-market vehicle that everyone can afford - the latter is far, far more difficult. It remains to be seen if Tesla can successfully make the transition to higher production volumes and lower transaction prices. Keep in mind that Tesla has been making a fair bit of money by selling emission credits to other manufacturers - which amounts to a subsidy by other manufacturers to Tesla's operations (a.k.a. "cheating"). I am not sure whether Tesla is actually in the black by just selling cars without considering the cash from selling their emissions credits.
          Ryan
          • 7 Months Ago
          @Brian P
          EVs should be seen as a high end luxury item that is a status symbol...
          Mudotaku
          • 7 Months Ago
          @Brian P
          You would think that the same people that sells a Ferrari would know one thing or two about making a "Making a high-priced luxury vehicle that few people can afford".
          Jon
          • 7 Months Ago
          @Brian P
          My point is that Tesla's strategy is the correct one. New technology is expensive. So you sell it in expensive markets until the tech gets cheap enough to sell in economy markets. When flat screen TV's first came out they weren't marketed toward poor college students. It was the same way with improvements in ICE technology. Things like fuel injection, variable valve timing, electronic ignition. They start out in high price performance and luxury cars and trickle down into economy markets as the tech matures and gets cheaper. So why do automakers insist on forcing BEVs into a market they dont quite fit into yet? EV tech should be no different.
          GSP
          • 7 Months Ago
          @Brian P
          ZEV credits are "cheating?" LOL So there is no value in zero emissions, zero petroleum mobility? Maybe on your planet, but not on mine. GSP
        Winnie Jenkems
        • 7 Months Ago
        @Jon
        The Tesla is a proper luxury car with the performance (and pricetag) to match. The Fiat... isn't.
      360_AD
      • 7 Months Ago
      Marchionne's been whining about this since day one. This isn't news. Furthermore, the 500e is only available in CA and all available cars were sold out long ago through pre-ordering. There is really no news at all.
        Eric
        • 7 Months Ago
        @360_AD
        Just checked my mid-sized city dealer. He's got 10 on the lot, 25+ in transit. He'll deal bring cash. Rent a trailer, or a PO Box and a trailer and lease it.
        Rotation
        • 7 Months Ago
        @360_AD
        The cars are not nearly sold out through pre-ordering. That's usual marketing nonsense. Car dealers advertise them including one who parks their inventory next to a local congested highway with signs "carpool lane eligible" on them.
          Dean Hammond
          • 7 Months Ago
          @Rotation
          funny, in California the HOV stickers have run out......all of a sudden the unsold vehicles that already had the sticker attached to them, became hot commodities...
          Dean Hammond
          • 7 Months Ago
          @Rotation
          @Rotation...tell me about it, Ive taken to riding a Motorbike to and from work because even the HOV lanes in So Cal are at a standstill and bumper to bumper...CRAZY! However I CAN vouch for sales being lost on vehicles that do NOT have the stickers....
        • 7 Months Ago
        @360_AD
        That's interesting you say they're all sold out. Why does my local Fiat dealer have 42 units in their inventory?
          tump
          • 7 Months Ago
          I tried to buy one last year and was told there was an 18 car wait list and that they didn't expect to get any more - ever. So nobody really knows… (I didn't get on the list.)
          Spec
          • 7 Months Ago
          He might be right. Did you see that the latest recall of the 500e had like 4500 of them! I've started seeing lots of them around lately. I think people are picking them up on the $200/month lease. I'm kind of tempted but I already have an EV. Do a search on the 500e webpage using a big city in california and you'll find lots of them. The lack of any fast-charging is annoying.
      Joeviocoe
      • 7 Months Ago
      "The battery itself should cost around $12k. The electric motor is cheaper than the gas motor, and the car sells for a $15k premium over its gas counterpart. So I don't see how it costs nearly $45k to produce, unless it's because the volume is so small that it increases costs. The Leaf, its main competitor, is profitable at a slightly lower price with the same size battery pack. I see a lot of these in my neighborhood and Los Angeles and I think they look great with their unique front clip and turbine wheels. I would buy one myself if it wasn't too small to meet my needs." -ferps *deserves repeating* If you pussyfoot around with electrification .... sure, you're gonna lose. Tesla is not successful because they is overpriced.. they are because they went "balls deep". Nissan, with much smaller margins, is profitable with the Leaf for the same reason.... Ghosn is 10 times the CEO Marchionne claims to be.
      RJC
      • 7 Months Ago
      Sometimes Mr. Marchionne's brand of pure honesty is a little too honest. If you believe the economic theory behind scaling production up, then building more of anything will lead to lower costs. Oh, and keep up with the R&D, that'll lower costs as well in the long run, just like everything else.
        Larry Litmanen
        • 7 Months Ago
        @RJC
        Yes if you produce a lot of something and keep making money on it you can invest more into a plant and reduce costs. But if you are not making any money and you KNOW you will not because they tech is not there yet....how can you justify producing even more cars that you are losing so much money on.
          TurboFroggy
          • 7 Months Ago
          @Larry Litmanen
          BS. Tesla and Nissan are making money on BEV technology today. You can't make money from day 1 of production. Toyota loss massive money per Prius on the first Gen.
        cooker263
        • 7 Months Ago
        @RJC
        You're right about economies of scale, but there are other aspects of production and demand that make each car company, it's brand and product lineup unique. While this generally works as an economic theory, there are many companies that bit the dust by just following that advice. There is a lot more to the equation that must be considered.
      ForcedInduction90012
      • 7 Months Ago
      Don't worry. The 500 is hard enough to sell, let alone a $30k-something 500, that has limited range, and less space than the already micro 500.
        Larry Litmanen
        • 7 Months Ago
        @ForcedInduction90012
        I live in NYC and i have to say i see plenty of 500's here, don't know about the rest of the country but here they sell.
          helloac
          • 7 Months Ago
          @Larry Litmanen
          Yeah, Fiat already sales more 500s and 500Cs than Mini does Cooper Hardtops and Convertibles in North America
          ForcedInduction90012
          • 7 Months Ago
          @Larry Litmanen
          They are selling around 40,000/year. Their goals were considerably higher, and they've actually had a decline year over year. The 500 has a hideously cheap interior, it's build quality is very iffy, it's upright shape makes driving aggressively not so much fun, and it's got barstools for seats.
          Eric
          • 7 Months Ago
          @Larry Litmanen
          FCV isn't being exactly forthcoming on the sales figures of any of its Fiat line. But, if we can believe the recall for this thing which was just issued, they've made a little over 4,000 of them. If they've moved (No, I didn't say sold) that many in less than a year, it's fully 10% of their total sales figures for the 500 line. Nissan sure ain't doing that percentage-wise with the Leaf. But since it's a "EV Puro" and not an evil "Compliance Car," it's OK. If an EV is 10% of your sales, and you say you're losing that much on each copy, why are you still making them? Methinks Sergio was just playing to the audience, had no script and reached back in the cranium data base for some BS. Not that I've ever done that, mind you.
      HVH20
      • 7 Months Ago
      It doesn't help that it is a $25k battery pack made in low volume and designed around a pre-existing chassis that it wasn't designed for. Think of it as a really high end car conversion and it looks pretty good and cost effective. I think he underestimates the potential of the upcoming PHEVs. Once that T&C hits the market they won't be able to make them fast enough.
        Spec
        • 7 Months Ago
        @HVH20
        If they are paying $25K for that 24KWH battery pack then Sergio Marchionne is a TERRIBLE businessman.
          CoolWaters
          • 7 Months Ago
          @Spec
          24khh * $250 per kWh = $6000.
          GSP
          • 7 Months Ago
          @Spec
          Due to Sergio's decision to only tool for low volume, their cost for the battery will be higher. It might be $1000/kWh. Same problem for the other components. GSP
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