Wednesday, May 21, 2014

FIAT Losing Money On Every 500e Electric Car

It seems that Chrysler's Italian savior has adopted the Big 3 policy of losing money on cars they sell but making it up in volume.

The Detroit News: Marchionne: Fiat loses $14K on every electric 500

So why are they selling the 500e when every car is a $14k hit to the bottom line?

Basically it's due to perverse environmental incentives and regulations with which the company must comply.

Marchionne last year had estimated the company would lose about $10,000 on each subcompact 500e, which went on sale last summer and was created to comply with California’s zero-emissions vehicle rule. Fiat will expand sales to Oregon this summer.

Without the regulation, it's unlikely FIAT would willingly produce a loss-leader car like the 500e.

The Fiat 500e, has a starting price of $32,300, but can be purchased for as little as $19,300 when accounting for tax credits and incentives.

In other words, the rest of the US via the electric vehicle income tax credit is subsidizing California car buyers picking up electric vehicles for below cost. The vehicle is only environmentally (and that's only if you don't look to where the electricity in the electric car comes from) but not economically viable.

On top of losing on the 500e, FIAT must also buy emissions credits:

FCA — which has had to buy emissions credits to comply with U.S. guidelines

FIAT has found itself fouled by government fiat.

1 comment:

Old NFO said...

I'm afraid I'd be dumping it... NOT worth the 'political capital'...