Fiat Chrysler’s Sergio Marchionne throws more cold water on Tesla, EVs

12 October 2017 - Autoblog

Fiat Chrysler’s Sergio Marchionne throws more cold water on Tesla, EVs

He praises Elon Musk's marketing skills, doubts his ability to make money

Fiat Chrysler CEO Sergio Marchionne has once again sounded off on industry upstart Tesla and its wunderkind boss, Elon Musk. In the process, he doubled down on FCA's reluctance to follow its competitors headlong into electrifying its vehicle fleet, saying "we're not betting the bank on going fully electric in the next decade. It won't happen."

Marchionne made his comments on Monday during remarks at the New York Stock Exchange, where he was marking the 70th anniversary of Ferrari. They come as Tesla struggles to ramp up production of its Model 3 sedan, its first mass-market offering, and the company continues to hemorrhage money. Here's what he said:

"We still don't have a viable model for delivering an electric car. As much as I like Elon Musk, and he's a good friend, and actually he's done a phenomenal job of marketing Telsa, I remain unconvinced of a new economic viability of the model that he's pitching. So I think we need to be careful, because when we embrace electrification, and I made comments on the fact that we lose money on every Fiat 500, the electric that we sell in the U.S. Now that's reflective of the 2011-2010 costs in terms of components. Those costs have come down. If I were to do it again, I would certainly reduce the amount of the loss, but I would not make any money. And you can't run economic entities on losses. It doesn't happen.

"So how do we find a convergence of technology bringing prices of components down and allows us to price accordingly — or we need to navigate through this process in a combined way between combustion and electrification to yield at least a minimum of economic returns that allows for our continuity? The last thing you want is me to be successful selling cars for 24 months and then go bust. That's not a good story. Especially in a place like this which rewards economic success. Let's not sit here and design our own future in the tank. Let's try and do it properly. We will do all the right things. We are investing without making a lot of noise on electrification. We will combine it with combustion to yield the right level of CO2. But we're not betting the bank on going fully electric in the next decade. It won't happen."

It's not the first time Marchionne has publicly expressed doubts about Tesla's business plan. Last year he was quoted saying of the $35,000 Model 3 that if Musk "can show me that the car will be profitable at that price, I will copy the formula, add the Italian design flair and get it to the market within 12 months."

But he's also praised Musk for his marketing prowess, and during a visit with Musk and other Silicon Valley chieftains in 2015, Marchionne told Reuters "I'm incredibly impressed with what that kid has done."

While automakers including FCA's crosstown rivals Ford and General Motors rush headlong into plans to electrify their fleets, Marchionne has been a leading skeptic of electric vehicles. In the comments about the Fiat 500e he referenced above, he said that FCA loses $14,000 on each Fiat 500e it sells and that it only built the car because of California's zero-emissions law and to give engineers experience with the technology.

Marchionne's comments about combining electrification with combustion also jibe with FCA's plans to replace the Fiat 500 diesel with a 48-volt "mild" hybrid powertrain.

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