Fiat Reportedly to Lose $10,000 on Each 500 EV It Sells
By (Display Name not set) April 5, 2011
By Danny King, Contributor
Little car, big loss.
That's what Chrysler and Fiat's first battery-electric vehicle will entail for the two companies, Automotive News Europe reported, citing Chrysler-Fiat CEO Sergio Marchionne.
The companies, which this spring started selling the gas-powered Fiat 500 in the U.S., will take a $10,000 hit for each of the battery-electric version of the car sold in here when it is introduced in the U.S. next year, according to the publication, citing an interview with Marchionne.
Marchionne also said the 500 EV may be priced at about three times the base price of the gas-powered 500, according to the publication. That would put the battery-electric subcompact's price at around $45,000, or about $12,000 more than the Nissan Leaf BEV.
Granted, Marchionne said that the losses wouldn't have a huge impact on Chrysler's and Fiat's bottom lines because production would be limited. Chrysler representatives didn't respond to a request from Edmunds.com for comment.
Still, Marchionne's admission illustrates the difficult task confronting an automaker that wants to make money from electric-drive vehicles, given their huge development expenses and high battery costs.
Renault and Nissan have been the most aggressive in developing mass-produced electric vehicles, with the sister companies' CEO, Carlos Ghosn, saying that EVs may account for as much as 10 percent of new light-duty vehicles by the end of the decade. The companies, which plan to debut eight EVs by 2015, will have invested more than $5 billion in electric-drive vehicle development by that time.
Making money from even the most expensive EVs is a nearly impossible feat. Tesla Motors, which sells its all-electric Roadster for a base price of $109,000, has never been profitable and last year almost tripled its net loss to $154.3 million as its research and development costs jumped fivefold to $93 million.
Still, Chrysler obviously feels that fielding the 500 EV is worth the anticipated losses.
The company was sold by Mercedes-Benz parent Daimler AG to Cerberus Capital Management in 2007 for $7.4 billion and filed for bankruptcy two years later before being taken under control by Fiat.
Its financial difficulties have caused Chrysler to lag behind fellow U.S. automakers General Motors and Ford in electric-drive powertrain development. The company, which last March said it would start producing an undisclosed number of battery-powered Fiat 500 EVs in 2012 at Chrysler's Toluca, Mexico, factory - where assembly of gasoline-engine 500s started last year - was dead last among the 14 major automakers in fleetwide fuel economy for its 2010 model year, according to the U.S. Environmental Protection Agency.
Chrysler and Fiat this spring started selling the gas-powered version of the Fiat 500 in the U.S. as a possible competitor to BMW's slightly larger Mini Cooper. The Fiat with a 5-speed manual transmission gets 33 miles per gallon combined while the automatic transmission model gets and 30 mpg combined. Both use a 1.4-liter four-cylinder engine. The car, also known as the Cinquecento, has a base price of $15,995.
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This is how Chrysler goes bankrupt every few years.
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