Marchionne: Electric cars not worth investment
Detroit — Electric vehicles aren’t profitable, and they show no sign of grabbing enough market share to warrant serious investment. At least not according to Fiat Chrysler Automobiles NV CEO Sergio Marchionne.
No automaker knows what the future of robotic and electric vehicles really looks like. He doesn’t pretend to know, either.
And he said Monday at the Detroit auto show that it’s foolish to set self-imposed deadlines for electric or autonomous vehicles. The comments came just a day after competitor Ford Motor Co. announced plans to spend $11 billion to bring 40 new electric vehicles to market by 2022.
“I don’t know of a (business) that is making money selling electric vehicles unless you are selling them at the very, very high end of the spectrum,” Marchionne said at a press conference Monday. “Whenever we end up going to auto shows, the intensity with which we make these proclamations goes up exponentially.
“These proclamations that we hear about the advent of electrification and artificial intelligence and the inevitable association of artificial intelligence with electrification are all things which at best are conjecture. So making an announcement at the Detroit auto show that we’re going to have X-number of vehicles that are electrified in the future ... is that a wise economic thing to say? The answer is probably ‘no.’ ”
Marchionne is taking a hard line on being “technology neutral,” as he put it. Electrification will be a part of the company in the future, if only to comply with government regulations.
That indicates to some that Fiat Chrysler is bowing out of the race to lead the mobility marathon, in which General Motors Co., Ford, Toyota Motor Corp. and nearly every other major automaker is participating.
“He’s pretty pragmatic,” said Jessica Caldwell, director of industry analysis at Edmunds. “He doesn’t have aspirations for FCA to be a leader. Ford wants to help create the world. (Marchionne) is more comfortable letting the market dictate what to invest in. It seems like he’s very bottom-line focused.”
Marchionne said as much Monday. The only reason Fiat Chrysler makes any electric vehicles are to comply with government regulations, he said.
In the meantime, Marchionne is focused on hitting profitability targets by the end of 2018. The company will lay out a guidance plan through 2022 on June 1. At a later date, the automaker will announce Marchionne’s successor. The company has said that person will come from within Fiat Chrysler’s existing inner circle and will continue to drive profits.
Despite rampant speculation about the future of Fiat Chrysler, Marchionne said Monday he has no intention of selling off any part of the company. The automaker’s strengths currently exist in legacy brands like Jeep, Ram and Alfa Romeo, he said.
But his disdain for letting the public in on plans for the future runs counter to recent strategies at GM, Ford and even Tesla Inc., which misses nearly every deadline set by CEO Elon Musk.
GM less than a week ago announced it would put a fleet of autonomous vehicles on the road in a yet-to-be-named city by 2019. The automaker has not said how many it will build. But the company has said it will introduce 20 new electric vehicles by 2023, and sell 1 million electric vehicles globally by 2026.
Ford announced its boldest plan yet Sunday at the show. The company will launch 16 new full battery electric models among the 40 electrics planned for 2022. That couples with a pledge to deliver an autonomous vehicle by 2021.
That means two of Detroit’s Big Three are guilty of doing what Marchionne lambasted. Bill Ford Jr., Ford executive chairman, on Monday in a Detroit News interview contested the FCA CEO’s claims.
At last week’s CES technology show in Las Vegas, Toyota showed its version of the electric future with the e-Palette battery-powered concept vehicle, an open platform that can be configured to meet needs ranging from mobile laboratories to rolling pizzerias. And Honda this week premiered its new Insight hybrid, the fifth electrified vehicle launched by Honda over the past year.
Electric or not, the vehicles of the future are still products that automakers have to sell. Sharing plans for those products signals to investors where the company is heading, and it creates interest for potential buyers.
“There’s always danger in specificity, because plans can change,” Bill Ford Jr., Ford executive chairman, said Monday. “But electrification is here to stay. History will show whether it was smart or not (to talk about plans) but it’s important to signal where we’re going.
“It’s a big investment. It’s a big bet on the future, and it’s one that we are happily making because we’re a big believer in this and we want to lead.”
That shows the Motor City companies are growing apart as the industry evolves. Executives and experts have repeated over the last year that there will be clear leaders in the future global industry. And it takes a risk to be one.
“Everyone’s well aware that EVs don’t make money,” Caldwell said. “But someone has to start this or nothing would change.”