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Can FCA compete in an EV future?

by Chris Vander Doelen on

The auto industry’s tidal flow toward electric vehicles is gaining speed, with most of the world’s leading automakers and parts houses having announced sweeping new investment and product plans.

But there is one name notable by its absence among the companies unveiling their electrification plans, and its initials are FCA. The yawning gap between the industry’s EV plans and lack thereof at Fiat Chrysler Automobiles’ was noticeable to analysts months ago and continues to widen by the day.

Pacifica Hybrid named 2018 Best Car to Buy by Green Car Reports

It’s not as though FCA can’t do EVs. They’ve proven they can with the Fiat 500e, even though it’s available only in California and loses about $20,000 per unit, according to FCA CEO Sergio Marchionne.

This week the Pacifica Hybrid was named 2018 Best Car to Buy by Green Car Reports, beating out every other EV on the market as the most family-useful electrified vehicle you can buy. Quite a feather in the corporate cap as the industry stampedes towards an electric future.

But what are FCA’s EV plans beyond those two? Nobody outside the company knows.

It’s no mystery where the rest of the industry is headed. GM, Ford, VW, Mercedes-Benz, Renault/Nissan/Mitsubishi, and even Cummins have all announced major steps toward electrification. GM announced plans last month to introduce 20 new EVs, some on a second new EV platform coming in 2021, and plans to be selling one million of them per year by 2026. Ford says it has 13 in the works and it will invest $4.5 billion in its program.

This morning VW announced it would invest $40 billion in the next five years to tilt its entire portfolio toward electric vehicles. All 300 models of its 12 brands will be available as EVs, its CEO Matthia Mueller said in a statement. Tesla announced plans for a new roadster and an EV semi truck Thursday night.

The list of automakers  and suppliers actively working on developing batteries or EV platforms, or both, includes virtually every name in the business. Meanwhile, China, the U.K. and France have set near and long-term goals of banning the sale of new gasoline and diesel car engines.

There’s been mostly silence from Fiat Chrysler Automobiles on the EV front — except for Marchionne pouring cold water on everybody else’s plans as financially unsustainable. A few weeks ago he made headlines by saying EVs are worse for the environment than gasoline or diesel when you count CO2 emissions in the battery manufacturing process, and the fossil fuels burned to produce most of the world’s electricity.

Marchionne is probably right about the cradle-to-grave emissions, at least with current energy sources. That doesn’t eliminate the appearance of FCA being left behind while the rest of the industry marches toward the same point on the horizon.

FCA staff are gamely trying to paint a better picture of the company’s advances. When asked about EV plans they point to mileage improvements due to new transmissions, weight loss programs, and stop/start technology. Those are gasoline efficiency gains, not electrification. As far as anyone can tell from the outside, the company’s EV efforts are moving at a snail’s pace.

Only 1,677 of the 2017 version of the Pacifica hybrid minivans were built before Windsor Assembly shut down for a minor retooling in October. Sources say the pace of assembly for the 2018s has picked up significantly – which is timely for sales, given the Green  Car Reports accolade – but production numbers are unknown. Sales of the 500e remain a mystery.

Some company observers say FCA may be relying too heavily on suppliers for key new-world technologies. But the issue might be purely financial: FCA simply doesn’t have the massive amounts of capital required to bring more EVs to market at loss-leader prices.

Marchionne said as much in Italy last month: “We still don’t have a viable economic model for delivering an electric car.”

Marchionne, the self-confessed “capital junkie,” has made it clear his focus is paying down debt and improving FCA’s balance sheet, rather than gambling more on a segment he sees as a financial loser. Its quarterly reports are healthy, but betting big on EVs would require a return to red ink at this point.

As the CEO said in New York last month, “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. Let’s try and do it properly. We will do all the right things. 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.”

Well, we’ll wait and see what Marchionne has in store for the company’s portfolio in the next five-year-plan, due early in 2018. That plan simply has to have some EV surprises in it. Whether it has the money for EVs or not, FCA can’t ignore them or pay lip service to the market segment with only a couple of products. Given where the rest of the industry is going, that also “won’t happen” without serious consequences to the company’s future.

Chris Vander Doelen was Opinion Editor and columnist of The Windsor Star until December, 2016; he was the Star's automotive reporter and columnist for seven years, and had also covered the political and gambling beats. With his wife, Veronique Mandal, he wrote the book Chasing Lightning (1999). Chris won a National Newspaper Award in 1997 and more than a dozen provincial news awards. There is a Chrysler 300 in his driveway.

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