Sergio Marchionne, CEO of Fiat Chyrsler, recently sat down with CAR Magazine to talk about the automotive industry over some lunch. A snippet of the chat revealed that, despite Tesla’s recent success with the Model 3 reveal, he doesn’t think electric cars will pan out in the future.
Fiat Chrysler is the seventh-largest automotive manufacturer behind Toyota, General Motors, Volkswagen Group, Hyundai, Ford, and Nissan. All six of these companies have each pivoted billions of dollars in resources and research towards the development of alternate-fuel technologies like hydrogen power and electrification.
And yet the boss of Fiat Chrysler, Sergio Marchionne, still isn’t convinced that electric cars are a rational replacement for the ICE-powered automobile, as he reiterated in a recent conversation with CAR Magazine.
Full disclosure, I do not have a membership with Car Magazine and thus can’t read the full text, but the final paragraph of what is made available online reveals enough to show Marchionne’s interesting perspective on the state of electrification in the auto industry.
Here’s the snippet from CAR:
In fact [Tesla] created an icon, just like Apple did with its iconic iPhone. Is this not an approach FCA could mimic?
‘Welcome to the world of icons!’ quips Marchionne. ‘I don’t make iPhones. I make cars. Why don’t I make the iPhone of cars? Because if it looks and smells like Tesla, I don’t know how to make that economic model work. There is nothing Tesla do that we cannot also do. We build cars, sell them and are still able to pay the bills. But I’m not even sure you can recover all of your costs – let alone generate a profit – through electrification. The answer is bound to be somewhere else, and the question is whether we are doing enough to try to explore that somewhere else.’
I’m extremely curious as to what “answer” Marchionne is looking to find, as hydrogen power is on the way out and Tesla’s recent reveal of the compact fully-electric Model 3 resulted in over 300,000 deposits and a rise in the stock value of the company.
I mention hydrogen power because it’s the only other alternative fuel option that’s been seriously vetted by major automakers alongside electrification. With the success of Tesla causing a shift in the rest of the industry, hydrogen seems to be losing.
Hydrogen fuel-cell vehicles are the most rational option for our projected future of fleets of autonomous cars, as you wont have the foundation (the cars) of these new ride services motionless for hours on end getting a charge. Instead you just refuel them as you would a current ICE vehicle and send them back out.
The issue with hydrogen is the amount of excess energy it takes to collect, store and transport for use as an alternative fuel. As Elon Musk once pointed out, hydrogen better serves as an energy storage mechanism, and not a source of energy.
So that leaves electrification. Marchionne questions Tesla’s business model as the young company has yet to see a profitable year. But as is always pointed out, all of Tesla’s revenues go directly back into research and development of existing and future products, which is why the automaker has been able to introduce three new fully-electric models or concepts in the span of four years.
BMW, Mercedes, and Audi have recently promised electric models in showrooms by 2020 in anticipation of the new affordable Chevy Bolt and Tesla Model 3 vehicles reaching the market. Hyundai, Toyota, Ford, and almost every other major automaker has also admitted to similar commitments by 2020.
So far Fiat Chrysler’s plans seems to include the hybridization of many of its models by 2025, which is mostly an attempt to improve the company’s CAFE standards.
Of course it’s completely fair for Marchionne to be defensive against the prospect of the entire automotive industry shifting to electrification. Fiat Chrysler’s bread and butter comes from its truck brands, Jeep and
Dodge Ram (but mostly Jeep). The automaker is almost desperately searching for a new partner to help take care of its non-truck products, showing a serious hole in the lineup.
Fiat Chrysler doesn’t care about electrification because, right now, its sales suggest that consumers don’t want electric cars.
Instead the automaker has shifted to developing down-sized, more efficient engines (as have every other company), as well as possibly expanding its diesel models in the future.
Marchionne has also gone on record suggesting that the electrification of the auto industry opens the back door to tech companies and suppliers to dictate the direction of the automaker. This is a fair assessment as a large part of Tesla’s delays with the Model X were issues with suppliers. Elon Musk also recently stated that the production timeline of the Model 3 will be directed by the “least lucky and least competent supplier.”
The CEO may be turning around on this tech-phobia, as just recently Fiat Chrysler and Google penned a deal to supply hybrid Chrysler Pacificas for the tech company’s next self-driving vehicle project.
But with the entire heft of the automotive industry behind electrifying our cars of the future, will Marchionne have found his alternative “somewhere else” by 2020? Or should he be re-thinking the electric car? Maybe the electric truck?