Sergio Marchionne urges you not to buy a 500e.
It’s an odd thing when the CEO of a carmaker hates making a car—and directs his customers to eschew the vehicle at all costs. But that’s exactly what Fiat Chrysler Automobiles CEO, Sergio Marchionne, told us all to do—not to buy the 500e—a couple days ago during a talk at the Brookings Institution.
“I hope you don’t buy it,” he said, “because every time I sell one, it costs me $14,000.”
Marchionne went on, “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. If we build just those vehicles, we’ll be back in Steve’s successor’s office in Washington asking for a second bailout, because we’ll be bankrupt by Christmas.”
Now, I’m no economist. I actually declared marketing as a minor in college and dropped it after one economy class because it hurt my head too much. But I don’t quite understand what the problem is. I know that charging $14,000 more for the car would probably not go over well, but I’m also not quite sure how he really is losing that much on every single unit. The Nissan LEAF is profitable and sells at a lower price, yet has the same size battery pack (which is one of the biggest EV expenses). Is it just because Nissan makes many more examples of the LEAF, meaning that volume of the 500e is too small to be profitable? (Because then wouldn’t the solution be to build and sell more?) Or am I missing something else? Please humor me below in the comments.
The Fiat 500e
Marchionne made this claim that also baffled me: “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.” Now sure, I’m willing to bet that Chevy takes a bath on the Spark EV (maybe not a $14,000 bath, but at least a bath that uses a fair amount of hot water, perhaps in a golden tub), but I’m pretty darn sure that Nissan makes some kind of profit with the LEAF. The brand is always so damn excited about it; I can’t imagine them celebrating giant financial losses.
This is not the first time that Marchionne has complained about losing money on the Fiat 500e. He previous grumbled that it cost him $10,000 every time one eco-friendly individual drove one off a dealer lot.
Apparently, however, Marchionne is the expert on electric driving. He is the final authority, guys, and he meant it when he said, “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.”
Marchionne is essentially saying that despite how terrible we have been and are being to the environment, it’s much cheaper for him to continue that way of life than it is to find new ways to preserve life as we know it. The climate may be headed for hell in a hand basket (and taking the human race with it), but as long as he can afford his private jet and nightly lobster dinner, Marchionne is happy.
Maybe it’s because I’m a child, but right now I want nothing more than to go out and buy the 500e. Or at least a burrito.
You can listen to the entire podcast below, but I warn you, it’s pretty long. I did not sit through the whole thing but instead skipped ahead to about 2 hours and 37 minutes in.
Timothy Moore takes his leadership inspiration from Michael Scott, his writing inspiration from Mark Twain, and his dancing inspiration from every drunk white guy at a wedding. When Tim is not writing about cars and money, he’s working on his novel or reading someone else’s, geeking out over strategy board games, hiking with his pooch, or channeling his inner Linda Belcher over beers with his friends. See more articles by Timothy.