By on January 3, 2016

Tesla Supercharger With Model S At Tesla Dealership

Business Insider transportation editor Matthew DeBord (formerly of Jalopnik too) said Tesla and Fiat Chrysler’s stock show both companies’ susceptibility to market volatility and that each automaker could be in dire situations if a mild recession were to rear its head again.

(Although he does note that the best return on an investment this time last year would have been a few hundred bucks into FCA’s stock.)

Tesla may have more in common with FCA than it likes in terms of market unpredictability, which could raise the specter of a merger if its Model 3 isn’t on time or if the economy takes a dive, DeBord writes. As long as Musk doesn’t talk openly about hugging Mary Barra, he may have a decent shot.

DeBord’s analysis is based of Tesla’s 2015 performance, which has been its best year as an automaker.

Tesla operates like a true startup, he writes, whereas FCA has a more established — albeit shaky — business model. Even though FCA had a very public failed courtship with General Motors and an announced delay in its return for Alfa Romeo, the company’s share price has surged nearly 20 percent for the year.

Tesla needs to meet base targets to continue; FCA needs to expand beyond selling Jeeps and gain traction in BRIC territories soon.

The similarities continue, but he raises an interesting point: if the the U.S. economy were to sink again, who’s getting saved?

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90 Comments on “Analyst: Tesla and FCA Wouldn’t Weather ‘Mild Recession’...”


  • avatar

    I’m still desperate for my Tesla shares to hit $300 so I can sell all – but it doesn’t feel like it’s gonna happen. As far as I see it, FCA is more in jeopardy than Tesla is. Tesla’s cars cost so much that they only sell to wealthy people anyway. (Something I wouldn’t be saying if the 40KWh Model S wasn’t discontinued).

    Jeeps, RAM trucks, 200, Chargers… they are still gonna sell just fine.

    • 0 avatar
      nickoo

      90 days until model 3 unveil.

      • 0 avatar

        I guarantee you the Model 3 is gonna ultimately cost no less than $50,000.

        They love to do “fuzzy math” over at Tesla.

        $10,000 annual fuel savings LOL

        $7000 federal government creditz…

        • 0 avatar
          nickoo

          I think it will be 35 after rebates for a stripper model. The desireable one will cost near 50 for sure. They are still going to sell a boat load of them. If the stock ramps pre unveil i would sell.

          Bmw i3 is a brilliant little ev for a first attempt at evs. There are great tear down videos on youtube showing its innovative assembly. The only flaw is that it doesnt have enough range.

        • 0 avatar
          heavy handle

          50k is a decent price point for Tesla. Remember than the average new car transaction price is above 30 in the US, and Tesla’s a premium brand.

          • 0 avatar

            $50K was a decent price for an entry-Model S.

            For a smaller Model S?

            I think not.

          • 0 avatar

            The only way a $50K Tesla Model 3 does the needed volume at $50K is with compelling government subsidies AND a compelling lease payment. Does anyone want to make a stock bet on either or both? Tesla is already in deep guaranteeing the residual for Model S on many deals. No one will insure those residual values without some market history.

            Prius resale values at wholesale have dropped through the floor. With fuel prices this low Tesla will be selling Model 3 into a market where the first adopters will grab up the first ones. Its anyone’s guess what happens after that. Perhaps Musk will engineer a Middle East war to up fuel prices.

      • 0 avatar
        Vulpine

        Agreed. Model 3 should kill BTSR’s complaint of, “Tesla’s cars cost so much that they only sell to wealthy people anyway.”

    • 0 avatar
      TrailerTrash

      But dude..they are not selling. Jeep is.
      And they have no R&D and they have old as dirt platforms.

      At least Tesla has the greenies, the 1%ers and government behind them.

  • avatar

    FCA will combat any downturn with CD players. Tesla… No CD players. Doomed.

  • avatar
    Big Al from Oz

    I do think it’s a bit simplistic to state that Tesla and FCA are similar. This article seems to be a story, just a story so this journo meets his quota.

    For starters Tesla is heavily reliant, more so than a conventional manufacturer for the taxpayer’s hard earned cash. Tesla or EVs are not ready for the market. They are only selling because the governments (all levels) subsidise the products.

    FCA on the other hand has a problem with having enough cash to invest into new products. It seems FCA is heavily reliant on Mercedes Benz’s platforms for most of it’s cash and of course Ram. How much do the Fiat based platforms contribute to FCA’s bottom line and profit.

    There are some easy pickings for FCA out there in the global market, ie, a lengthened “Wrangler” cab chassis with a diesel. So long as FCA can resolve their intermittent reliability and quality issues.

    The Ram needs a comprehensive update as well or I can foresee Ram numbers dropping. They have become relatively static in sales over the past 3/4s of a year.

    I don’t know how FCA is going to find cash.

    Elon Melon the learder of Tesla (and other welfare businesses) is basically living on welfare. Sergio on the other hand needs to be a creative business man to resolve FCA’s issues. Who will FCA team up with?

  • avatar
    nickoo

    Fca is done. Start the deathwatch. Sergio one hit wonder is bleeding chrysler dry of cash for his never gonna sell more than 12 alfa brand and even worse maserratti and leaving chrysler with fiat based cars that arent good enough and have all flopped.

    • 0 avatar
      Lorenzo

      Sergio is using Chrysler (Jeep and Ram) money to make payments on over $40 billion in bond debt. He doesn’t even have enough left over to produce Alfas on time, but it’s “just over the horizon” for PR purposes, and make FCA attractive enough for a company-saving merger.

      • 0 avatar
        Vulpine

        The problem with that argument is the simple fact that FCA is seeing continual double-digit growth, even if it is on the back of Jeep. I seem to remember some here who insisted nobody would buy the new Cherokee or the new Renegade, yet they’re amazingly popular for being “Fiat” products.

        FCA may be having it’s problems, but Sergio is right about one thing; the cost of manufacturing cars has gotten too high; people on average simply cannot afford to BUY a new car any more. By consolidating manufacturers, the costs of engineering and assembly can be reduced through shared parts and shared platforms. And honestly, were it not for its trucks, GM would still be in dire shape. A merger would help both GM and FCA through reducing costs for both companies and opening up the model line-ups to fresher platforms. But then, you can’t say Americans aren’t bull-headed; they’ll ride a dying horse into the ground before they’ll admit they were wrong. GM’s already done it at least once and their growth numbers overall are nearly stagnant. FCA is at least showing growth in what many consider to be a saturated market.

  • avatar
    Pch101

    As is every other major automaker, FCA’s fate is tied to economic cycles.

    Tesla loses money because of scale — it doesn’t sell enough volume at prices that are high enough to turn a profit. This is an issue whether or not there is a recessionary cycle.

    • 0 avatar
      nickoo

      Yes they do. Model s has highest margins in the industry. Tesla the company is pumping money into the giga factory as fast as possible, thats why they are in the red. They are risking it all on the giga factory, so they can sell model 3 at $35,000 at a heathy profit. The battery will only cost around 6000 instead of close to 20,000 once they ramp up the giga factory.

      • 0 avatar
        Pch101

        I have to hand it to you — your track record of accuracy is about 0%.

        Gross margin is not profit.

        Tesla’s gross margins are not comparable to the rest of the auto industry because all of its sales are at retail.

        Tesla’s high sales costs do not reduce its gross margins because those costs are included in SG&A. But those costs are reflected in its net losses — there are no profits. You should learn how to read a financial statement prior to commenting.

        • 0 avatar
          nickoo

          I’m not wrong…googling Tesla has highest margins in industry comes up with countless news articles confirming it. Here is simply one:

          http://www.bloomberg.com/news/articles/2013-06-05/musk-says-tesla-s-gross-margin-can-approach-porsche-over-time-

          The point is, they do sell enough to be profitable, I have read thier quarterly filings, they are choosing to use their profits and then some to ramp up the giga factory in order to make an affordable ev as fast as possible, which was their plan since at least 2006 when Musk came aboard. Tesla has succeeded beyond their wildest projections and the rumors for this quarter indicate a blow out sales record. Model x deliveries based on reservations alone will keep them afloat for the next two years and their cars just keep getting better with each update.

          • 0 avatar
            Pch101

            You don’t understand how to read a financial statement. Not that I’m surprised by your ignorance but doubling down on your ignorance isn’t helping your case.

          • 0 avatar
            wmba

            @ nickoo

            Ask google this question: Has Tesla Inc ever made a profit?

            The answer is no. Musk mumbles on about being profitable by 2020, for example. In August CNBC reported Tesla lost $4,000 on each vehicle. And so on and so on.

          • 0 avatar
            Ihatejalops

            @Nickoo

            You just contradicted yourself within your own comment.

            Musk says it can approach Porsche over time. Porsche is 15%. Where’s the 25%?

            GMROI is negative. Has been. No way the Model 3 comes. I can announce an electric car that’ll be here in 2019 no problem. Give me money!!

          • 0 avatar
            Pch101

            You can’t compare Tesla’s gross margins to those of Porsche(or any other major automaker) because a substantial amount of Porsche’s (and every other automakers’) gross margins consist of revenues from wholesaling, while Tesla’s are exclusively retail.

            On the other hand, it isn’t possible to book all of the revenues at retail without also having a network of stores. Those stores cost money to operate, but those costs are not included in gross margin.

            Elon Musk likes to talk about gross margin because he is well aware that the average journalist and dumb money enthusiast doesn’t really know what gross margin is.

            Musk is providing a soundbite for the uninformed, and I have to give him credit for knowing his audience. It isn’t possible to understand a business if you can’t understand the numbers, and it’s pretty obvious that the fanboys don’t know what gross margins are and aren’t, or what profit is, or just about anything else.

            (That isn’t to say that Musk isn’t a highly capable manager — he clearly is — but that doesn’t mean that he’s shy about duping his fan club.)

        • 0 avatar
          wumpus

          Are you seriously suggesting that fleet sales are the key to automotive profitability? TTAC should start a Toyota deathwatch and cancel all others.

          I’m guessing you missed best troll of 2015 and are trying for 2016.

          • 0 avatar
            CarnotCycle

            “Are you seriously suggesting that fleet sales are the key to automotive profitability? TTAC should start a Toyota deathwatch and cancel all others.

            I’m guessing you missed best troll of 2015 and are trying for 2016.”

            I think the point being made here is how gross margin relates to sales channel for comparison. Price is higher at retail than wholesale for a given widget (typically), hence gross margin of said widget is impacted by a volume-discount channel.

            If one is constantly highlighting gross margin of their widget vs. a competing widget, an observer would be wise to adjust hype versus the sales realities.

            On side note, I would guess highest gross-margin per vehicle in industry is held by outfit like a Ferrari, which is really the kind of company to compare to a Tesla – boutique luxury products that depend on brand equity for a great deal of their cachet (and margins). Even Porsche doesn’t fit that profile anymore selling all those sedans and VW’s.

      • 0 avatar

        It makes no difference what Tesla’s margins are. They aren’t high enough to overcome its expenses.

      • 0 avatar

        What is a better investment – Giga-factory or Alfa Romeo. Gentlemen make your bets.

        • 0 avatar
          Lorenzo

          One has the investment capital to build the giga-factory, the other doesn’t have the money to build many Alfas. the gig-factory might have value, or be a white elephant, but Alfa is empty promises. I’ll take the giga-factory, expecting to lose much/most of the investment, over losing it all on non-existent Alfas.

  • avatar
    VW16v

    Wonder if this analyst also didn’t think Tesla stock would have blown up like it did in the past 2 years. With a recession the upper class the buyers of Tesla tend to increase their wealth. Maybe FCA would have some issues because of their line up of cars. But, I do not see Tesla going anywhere anytime soon.

  • avatar
    heavy handle

    “FCA needs to expand beyond selling Jeeps and gain traction in BRIC territories soon.”

    Isn’t that what they are doing, at least as far as the BRICS are concerned. Putting aside Russia, which will be a dead market until oil rebounds, they are strong in Brazil and improving in India and China.

    The “expand beyond selling Jeeps” part is typical analyst claptrap. Jeep will be a strongly expanding brand worldwide for a while. If anything, FCA should be admired for the way they have pushed the brand into new markets. The notion that they shouldn’t use it as a beachhead is delusional.

    • 0 avatar
      Big Al from Oz

      heavy handle,
      FCA in these newer markets is not winning all. Here in Australia FCA is gaining a poorer reputation since they started to increase their market share. There are just too many niggling issues with FCA products. The Chrysler brand is hit and miss in quality.

      My sister has a nice Grand Chrokee, not one issue yet, but a couple of guys at work have them and they have had nothing but problems.

      For FCA to maintain a hold when selling they must produce vehicles comparable to Korean and Japanese in reliability. For most outside of the US, even many EU nations the purchase of a vehicle is a larger investment than in countries like Australia, US and even Canada. People are more cautious and aware of reputation and reliability/quality.

      Ford and GM have realised this, but under Fiat guidance Chrysler is still quite a ways behind in the area of vehicle quality and reliability.

      • 0 avatar
        RobertRyan

        @Big Al from Oz,
        FCA is having a horror year in Australia. Not only the many mechanical and software failings, prompting a Class action suit against the Company, but Clyde Cameron the CEO and his shonky dealings as well as a Scam competition.
        IVECO/Case seem to be hiding the fact they have anything to do with FCA. They are very much a separate entity. As a result have been doing well.

      • 0 avatar
        heavy handle

        I’m sure that scandal hit them hard in Australia and NZ but, to be fair, neither one is a large or growing market. The comment in the article was about the BRICs (Brazil, Russia, India, China).

        I am not convinced that FCA is behind GM and Ford in quality and reliability in the US market, at least with their newer product.

        Things are probably different in Australia, mostly because GM and Ford have such extensive local experience, brand knowledge, and dealer networks. Minor issues that are quickly corrected by a local dealer can lead to higher levels of satisfaction. As they say, every customer interaction is a marketing opportunity.

        • 0 avatar
          RobertRyan

          @Heavy handle,
          SUV’are booming in Australia, seemingly growing at an exponential rate.
          FCA in this market is going backwards rapidly. How it goes in the BRIC’s we will eventually find out. Russia will be a lacklustre market
          FCA problems were not minor issues, if they were then not a problem. It seems like they have never ending software and mechanical issues, as a result prompting a Class action

    • 0 avatar
      whynot

      “The “expand beyond selling Jeeps” part is typical analyst claptrap. Jeep will be a strongly expanding brand worldwide for a while. If anything, FCA should be admired for the way they have pushed the brand into new markets. The notion that they shouldn’t use it as a beachhead is delusional.”

      The problem is that Jeep is the ONLY thing they have going for them right now. Everything else they have released has generally landed with a thud in the market place, and I don’t think anyone except FCA and their fanboys believes the Alfa push will be any different. Look how quickly Masarati, the Alfa “test run,” fizzled out. Where is their attempt to be innovative in features and technology? If oil prices spike again (not that I expect that anytime soon) Jeep/FCA are screwed.

      • 0 avatar
        heavy handle

        “The problem is that Jeep is the ONLY thing they have going for them right now. (…) If oil prices spike again (not that I expect that anytime soon) Jeep/FCA are screwed.”

        Jeep’s major recent gains have been in Europe with the Renegade and Cherokee. Neither of these is a gas guzzler, compared to their immediate competition.

        You forget that Ram is also doing quite well, and the minivans are about to get a refresh (to be shown next week). Alfa and Maserati aren’t volume brands, but the same platforms will show-up in Dodge and Chrysler products.

        I worry more about GM. They are totally dependent on pickups in the US, and somewhat lackluster cars and crossovers in China. And they are still losing billions in Europe, even though that market has recovered. Their weakness in the European market just shows how un-competitive their cars are, and it won’t be long before other markets realize this.

  • avatar
    carguy

    Tesla is definitely a high risk stock. The company seems to be mainly driven by government subsidies, the cool factor of its image and the cult of personality that is Elon Musk. However, looking at its books it hard to justify the $32Bn market cap. Low gas prices, delays to market of more affordable products and a change in energy policy could all potentially spell big trouble quickly.

    FCA faces different problems but are an equally risky bet. Poor performance in Europe and developing countries has left them highly dependent on the US market where most of their revenue comes products with poor gas consumption. There is a very good reason why FCA is aggressively seeking a suitor – a return to $4/gal gas could quickly unravel any gains that they have made in the past few years.

    • 0 avatar
      Pch101

      Musk has convinced the dumb money that a manufacturing company that can never hope to have more than mediocre margins in even the best case scenario has the potential to be a high-tech, high-margin game changer ala Apple.

      Tesla is lifted by the tide of the latest tech bubble. The government isn’t to blame for overzealous stock enthusiasts.

  • avatar
    DeadWeight

    Business Insider is a p!ss-poor, hackneyed, buzzfeed-style website, similar to Seeking Alpha, where any imbecile can write any baseless tripe regarding financial/economic/company-specific matters.

    It was started by ex-Merrill Lynch banned dot.com promoter/broker Henry Blodgett.

    Having said that, Tesla is doomed to fail due to its business model (not to mention disposable within 60,000 miles powertrains, emerging competition from far more capitalized rivals, and low-for-long fossil fuel prices, etc. ), and FCA has obvious aging vehicle platforms, but this is not an insurmountable problem in an era of low borrowing costs (where bonds at +70basis points vis-a-vis U.S. Treasuries can be sold all day long by even junk-rated companies).

    • 0 avatar
      Luke42

      They’re a Silicon Valley tabloid.

      Oddly enough, BI actually has the value proposition Wall Street Journal claims: “everyone you work with reads it”.

    • 0 avatar
      WheelMcCoy

      Have to agree about the lack-of-value proposition of BI. I went to read the article and the vibe I got was the journalist admits there’s little correlation between Tesla stock, its true value, its relation to FIAT, and its relation to the economy. He was comparing charts for fun.

      That said, a better question is will Tesla weather an economic upturn stimulated by cheap gas prices? In a recession, the wealthy will still buy, albeit a little a bit slower. When gas prices are low for a long time, will potential Tesla buyers temporarily lose interest in electric vehicles?

    • 0 avatar
      DeadWeight

      You both raise good points about Tesla’s “trendy” equity, but with everyone from BMW, Mercedes, Lexus and even loftier luxury/sport-performance brands (Porsche, Ferrari, McLaren) coming barrels full blazing with new, pure EVs, Tesla’s will lack the exclusivity it once held.

      Also, I believe the reports of Tesla’s powertrain durability/longevity issues (60,000 miles then major if not catastrophic problems), if proven true, will be a death knell given the degradation of battery packs absinthe depreciation that goes with that, since Tesla is selling vehicles, in large part (guaranteed resale values), at a price point that is being floated by a probable unrealistic, optimistic residual value formula.

  • avatar
    Whatnext

    I don’t know much about FCA’s financial situation, but to my eyes they still have the most compelling product of any North American manufacturer.

  • avatar
    Mandalorian

    I think FCA will do just fine. They’ve built themselves a niche on power/performance, pretty much anything they make that can take a V8 is very competitive and desirable.

    They’re 4-cyl stuff is weak, but they still sell in respectable numbers.

    What’s in jeopardy is the Chrysler brand. It doesn’t have a good reputation for quality or reliability. Dodge is now synonymous with performance vehicles like the Challanger and Charger, RAM is solid as far as trucks go and we all know Jeep is an all-star.

    But Chrysler? It brings up images of a sleezy middle-manager in an airport rental.

    • 0 avatar
      Vulpine

      Fiat (the brand) has an historical reputation that most people here in the US refuse to forget. I personally question many of the supposed anecdotal reports of poor quality from their vehicles as compared to the Daimler-designed models that Fiat is still having to repair. By no means is their 4-cyl stuff ‘weak’, though I won’t argue that the original Dart was due to Federal fuel economy mandates. Now that the Fiat 500 itself can demonstrate 40mpg+ economy while still offering lively performance the Dart itself has managed to realize better performance even from Fiat’s base 1.4L engine and surprisingly good performance from the turbo versions (with 6-speed auto trans.) Maybe not 40mpg worth, but still better than most of their competition on economy with similar performance when compared class-for-class.

      No, most of the issues for both Chrysler and the other Fiat brands is a reputation that to a good extent is no longer deserved. Daimler did Chrysler a major disservice with their “mutually beneficial” merger that cost Chrysler far more than it cost Daimler, driving them into bankruptcy. Chrysler’s Fiat-built models are proving themselves better than their Daimler-designed predecessors but it takes time to redesign a brand’s entire lineup. Until those Chrysler models can get the Italian engineering without the cost-cutting measures used by Daimler, Fiat will be forced to absorb what I believe Daimler rightly deserves.

  • avatar
    callmeishmael

    I doubt that Tesla would succumb to a mild recession. Tesla buyers, like others shopping for cars in that price range, aren’t just buying transportation. OTOH, isn’t there an adage to the effect that combining weak small companies together results in a weak big company? I think that FCA can thrive if it simplifies its product lines and works like hell to improve quality. Alfa? FCA already has two halo cars and they’re both pretty much making the same statement. So stick with that theme and make the most of it.

    EDIT: Someone remind me how many analysts were caught flat footed when the economy tanked in 2008.

    • 0 avatar

      Agree on Tesla – Tesla owners are those who make decisions about shutting down products and divisions, layoffs and hiring quotas. They also have golden parachutes. So the do not care about recession. It is not 30s – Government will bail them out no matter what happens. They are members of exclusive club. 1%.

      • 0 avatar
        DeadWeight

        When the massive, still-ongoing tech bubble bursts, Tesla shares are going to get disproportionately slammed, probably losing 1/2 to 2/3 of their value.

        NASDAQ, as always during periods of easy, speculative, tech money booms, will lead the next full equity market bleed.

        Tesla will be a casualty.

        All the Nevada battery facilities and Tesla home generators in Elon Musk’s dreams won’t spare Tesla.

        • 0 avatar
          tresmonos

          This. The majority of TSLA shareholders are looking to charts and the internet school of day trading to see when they should buy and sell shares of the company.

          Not to mention that Tesla employees are getting paid in paper because Tesla doesn’t have the revenue to pay it’s people.

          I love the concept (it’s very vertically integrated and has high quality), but if I am in love with something, it’s for some nostalgic, irrational reason. And I’m irrational as f*ck when it comes to US based manufacturing.

  • avatar
    Sjalabais

    A mild recession is expected in Norway, one of Tesla’s biggest markets. Ironically, this is caused by very low oil prices, that have send the local currency down 30% and more against the dollar. I wonder if that could affect the brand and the expectations towards it?

  • avatar
    Whatnext

    I went over to chrysler.com and noticed the banner reading The Future of Chrysler Will Be Revealed on 01/11/16, with the number 880 beside it. What’s that all about?

  • avatar
    zip89105

    FCA would do great because they build well equipped inexpensive vehicles.

    Tesla would just ask for another bailout and get it. Maybe NV gov Sandoval can find a way to blow another billion dollars of taxpayer money.

  • avatar
    28-Cars-Later

    So psyched, a “mild recession” in the middle of an economic depression. Yes. We. Can.

    Chrysler is the more interesting of the two simply because it needs to maintain forward momentum in order to remain attractive for buyouts or mergers as Sergio hint at doing. Pch points out FCA is tied more to economic cycles, if Extol wants to cash out it may have to wait until the next cycle, and they may not wish to do so. The question becomes who has the desire and cash/assets in a downturn to absorb FCA should it come up for sale?

    I say Tesla stockholders and leadership are too juiced in to a corrupt financial system to outright fail. In a similar vein to Chrysler, a merger or sale at even more of a premium than sp is already trading would be what most shareholders desire. But they are going to have to stay to course in order to get a nice premium in a recessionary environment.

    • 0 avatar
      Lorenzo

      Nobody’s going to buy an intact FCA, it’ll have to be broken up, with maybe Nissan buying Ram and Toyota buying Jeep. Come to think of it, Toyota alone has the money to buy both, and the new Dodge vans too. Somebody will want Maserati and Fiat-Brazil, and Volkswagen will finally own the Alfa nameplate. Chrysler and the rest of Fiat will disappear, weighed down by the debt burden left behind, causing massive write-offs.

      • 0 avatar
        28-Cars-Later

        Would such a breakup be permitted by regulators?

        Additional: Volkswagen could have made some interesting moves in such a situation but I’m not so sure they would do so now given their scandals and other financial problems. Unless VAG could cut a deal with gov’t to buy certain distressed FCA assets and keep jobs/production in the US in exchange for leniency. A new sponsor with big pockets? Then of course they’d have to ignore the fact DaimlerChrysler actually happened.

        • 0 avatar
          bball40dtw

          It may come to a point where there isn’t a choice. FCA can’t crank out Jeeps and Rams to offset everything else forever.

          • 0 avatar
            CoreyDL

            I have as much faith in the long-term prospects of FCA as I do in the suspension components of a 300. :)

          • 0 avatar
            bball40dtw

            All they have to do is look at their cross town rivals spending a ton of cash on hybrid, PHEVs, and BEVs, to see that they might want to start protecting for the downside. If (when) gas goes back up, people are going to buy Fusion, Escape, and Malibu hybrids, not whatever garbage 500 model FCA is trotting out.

          • 0 avatar
            CoreyDL

            The 500L manages more derp in two seconds than most cars do their entire product cycle.

      • 0 avatar
        derekson

        I think Hyundai would buy RAM. I’d guess Ford or Daimler or something would probably buy Jeep. Toyota doesn’t seem to have any interest in acquiring new brands.

        Before the diesel crisis i would’ve beet on VAG buying Jeep.

    • 0 avatar
      Ihatejalops

      Dude, didn’t you see Krugman’s hockey stick graph? All is well! Economy is way better!

  • avatar
    DownEaster

    I think Chrysler has a chance. I just don’t want to see Sergio merge in with something else and cash out leaving another “Merger of Equals”. Chrysler is making money but needs to invest in new designs and products. Many of its platforms are old or they are sold to buyers with less than stellar credit. Not a good idea. Fiat is using Chrysler to prop up the Fiat side which isn’t doing well. I wish Chrysler had stayed independent. It seems to just keep getting passed off from one owner to another that ring some money out of it then sell it. Hope the new minivans are a hit and they can get the new Grand Wagonner out. Lido made the point when he was running Chrysler in the 1980s that you need to sell a lot of the smaller cars to make as much profit as off of one car or truck. So in the short term Sergio’s business model ma not be bad but if they don’t invest in new product designs or have a cash reserve a recession will hit them hard.

  • avatar
    MrGreenMan

    FCA just needs to give us a RWD midsize car with a seven slot grill that is trail rated. Edit: With a Hellcat Hemi.

  • avatar
    hreardon

    Tesla has a narrow window for success: if they cannot hit mass market adoption within the next five years they risk losing their big margins to Audi, BMW and Mercedes. The German three are on the cusp of a major hybrid and full electric product launch. Sure, Tesla has first mover advantage, but the big players bring a much broader dealership and service network along with significantly more brand cachet.

    As for FCA, they’re more at risk of another petroleum shock due to the reliance on Jeep, Ram trucks and the 300 for the majority of their profits.

    My WAG (wild-assed-guess) is that with fuel prices staying at the low end of the band for the foreseeable future we’ll see Tesla continuing to sell to the wealthy early adopters, the Germans will bring more petroleum-electric hybrids that make consumers comfortable and happy with 40-50mpg returns (and conversely make low end Teslas a harder sell), Jeep will keep selling oodles of Jeeps and the rest of FCA will falter. Spiking fuel prices will kill FCA’s profits, won’t do much for Tesla unless prices fall dramatically and the Germans will shift consumers from petrol to their hybrid/full electrics.

  • avatar
    John

    Low interest rates and low gasoline prices have created the perfect environement for selling/leasing trucks and Jeeps. Those two factors will not last forever.

  • avatar
    CoreyDL

    “Business Insider…”

    Well there’s your first problem.

  • avatar

    FCA model line: 200, 300, 500. 500 looks kind of odd name. They should call it 50 instead.


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