By on July 31, 2017

2017 Jeep Compass

It’s no secret that hybrids and fully electric vehicles are about as appealing to Fiat Chrysler Automobiles CEO Sergio Marchionne as a crisp, button-up shirt. The FCA boss once famously railed against his company’s sole electric offering — the tiny, money-losing Fiat 500e — for losing $10,000 for every unit sold. Placating California doesn’t come cheap.

Still, Marchionne isn’t alone in distrusting the plug. Subaru and Mazda have shown a similar aversion to electrification, though even those automakers concede it’s a losing battle. In a conference call with investors late last week, Marchionne admitted defeat, outlining a plan to add electric motors to a significant chunk of FCA’s fleet in the coming years. One division stands to go the way of Volvo, with electric motors planned for each new car introduced after 2019.

What prompted the shift in thinking? Diesel, and the public’s growing distrust in compression-ignition engines.

While Marchionne’s plan isn’t yet fleshed out on paper — a five-year plan bows early next year, covering the company’s product timeline through 2022 — the investor’s call counts as an official beginning.

“What makes [electrification] mandatory now is the fate of diesels,” he said, noting the growing crackdown by various regulators on the technology. “We have been reluctant to embrace that avenue until we saw clearer the path forward.”

The Environmental Protection Agency delivered a big wake-up call back in January, denying certification for U.S.-market Jeep Grand Cherokee and Ram 1500 models powered by the 3.0-liter EcoDiesel. A Justice Department lawsuit ensued. Only on Friday did the EPA relent, granting certification to 2017 models equipped with revised emissions software.

It’s not just regulators with fine-toothed combs weighing on Marchionne’s mind. Jurisdictions around the globe have soured on diesels, with several European cities planning a ban of oil burners in the near future. The writing’s on the wall. The company needs to look elsewhere for fuel economy and emissions savings.

Despite the company’s new direction, the same fears persist. One reason Marchionne shied away from electrification in the past was the technology’s high development cost, and he’s still not confident the company won’t get burned.

“If the cost of batteries doesn’t come down, there will be a huge increase in pricing in 2022 and that will cause shrinkage in demand,” Marchionne told investors.

Besides the recently introduced Chrysler Pacifica Hybrid minivan, the next “regular” FCA vehicle destined for the hybrid treatment is the next-generation Jeep Wrangler (though talk of this version seems to have dried up in recent months). Expect plenty more where this came from. While FCA’s five-year plans have proven notoriously variable, Marchionne claims 50 percent of the company’s lineup will feature some form of electrification by 2022.

At Maserati, however, that number should hit 100 percent, and much sooner. The luxury halo brand will adopt electrification on a mass scale, he said, with nearly all of its R&D dollars funneled into electric powertrain development. Whether it’s hybrid variants of existing products, such as the Levante SUV, or all-electric sports cars, like the Alfieri concept car-inspired roadster anticipated for 2020, all Maseratis will boast some measure of electric propulsion in two short years.

It remains to be seen where FCA takes the strategy on the low end of its product range, especially in North America. Lately, the automaker’s biggest investments involve the production of new generations of the Ram 1500 pickup and Wrangler. Profitable and popular, but hardly green vehicles. Assuming stable gas prices, it’s hard to see much demand for low-volume hybrid versions of these utilitarian vehicles.

Global products like Jeep’s Compass, on the other hand, almost scream for a competitive hybrid variant.

[Sources: Wards Auto, Autocar] [Image: Fiat Chrysler Automobiles]

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21 Comments on “Sergio Warms up to Electrification, Even As FCA’s Light-duty Diesels Get the Green Light...”


  • avatar
    Vulpine

    Look at it this way: By going electric, you don’t have to worry quite so much about aerodynamics and cars can start taking on individualized styling cues again.

    • 0 avatar
      Big Al from Oz

      Vulpine,
      If your comment which tends towards EVs has to do with how the EU proposes to adopt EVs over the next 15-20 or so years then I do believe it is inaccurate.

      I would assume this move by the EU is also geared towards trade.

      Think about it. Asian cities will be confronted with the same problems as the EU. So, Asian countries will move in the same direction as the EU.

      Where does this leave the US?

      The US will need to play catch up again with the global market trends.

  • avatar
    thelaine

    He is such a bullsht artist.

  • avatar
    28-Cars-Later

    ““If the cost of batteries doesn’t come down, there will be a huge increase in pricing in 2022 and that will cause shrinkage in demand,” Marchionne told investors.”

    Sergio, the voice of reason.

  • avatar
    Big Al from Oz

    Steph,
    Where is this public distrust of diesel?

    The reality is if the US had cities like Paris or London the same rules would apply.

    I do know of Asian cities that are primarily gasoline and they have greater concentrations of pollutions than London or Paris.

    • 0 avatar
      RS

      It should be worded ‘Government agency of over-reaching environmentalists distrust of Diesel’.

      The public doesn’t distrust as much – Except for when said government agency does for diesel what it’s done for gas cans, etc.

    • 0 avatar
      DenverMike

      @BAFO – It’s that nasty, unfiltered *diesel exhaust* that makes Paris and London air pollution a catastrophic health hazard, and places to avoid, like any larger European town. They need to close those to all diesel traffic IMMEDIATELY!!!

  • avatar
    Big Al from Oz

    By the time this eventuates with FCA it will have been sold to a Korean or Chinese manufacturer.

    Maybe PSA would be interested in FCA.

    So, all this Sergio talk is just talk.

  • avatar
    SCE to AUX

    “If the cost of batteries doesn’t come down, there will be a huge increase in pricing in 2022 and that will cause shrinkage in demand”

    I think this guy just puts his finger to the wind to figure out what direction FCA should go. 2022 will be a full 10 years after Tesla introduced the Model S, and battery prices have been falling ever since.

    As for diesel, the government lawsuit was a sham – nothing like the VW mess.

    The Sweater is probably going to retire in a few years, so this will become someone else’s problem – clever.

    I can’t imagine working as a development engineer in this company, when your own CEO disparages the projects you work on – Dart, 200, 500e, and now any future hybrid/EV work.

    • 0 avatar
      TwoBelugas

      You mean like how the Bolt EV loses 9000 dollars for each one sold? How’s that declining battery cost working out for ya?

      https://www.cnbc.com/2016/11/30/gm-stands-to-lose-9000-dollars-per-car-on-chevy-bolt.html

      • 0 avatar
        ClutchCarGo

        If that’s still true (the source Bloomberg piece is over 8 months old), why is GM selling Bolts in states that don’t have EV compliance requirements?

        • 0 avatar
          TwoBelugas

          I hope July 2017 is recent enough for you, ClutchCarGo, to see where Bolt sits.

          http://fortune.com/2017/07/17/gm-shutdown-chevy-bolt-supply/

          With 111 day supply of Bolts, I’m not sure GM wants to sell too many of them at the price consumers really want to pay. But hey! Conveniently they are shutting down the plant but I’m sure it has nothing to do with Bolt’s proficiency at losing money.

          Besides, was there a recent development since Nov 2016 that drove lithium battery price down significantly for you to dismiss the Bloomberg piece as “over eight months old”?

          • 0 avatar
            Adam Tonge

            Orion is having an extended shutdown because the Sonic isn’t selling well. Part of the shut down will be moving more production over to the Bolt. The Bolt is just getting rolled out to all markets too. Eventually the Sonic will go away and it’s production will be replaced by a Bolt CUV.

          • 0 avatar
            TwoBelugas

            so does anyone have any actual source on any recent development in batteries that led to lower prices for the battery component of EVs, or is GM selling literally thousands of Bolts this year making people forget that it is still a money loser?

          • 0 avatar
            Vulpine

            GM has a habit of designing desirable cars for one market segment and then pricing them completely out of that segment. They’ve done so enough times that I almost refuse to buy GM any more as a result. I truly wanted an SST when it was in the design stage and they clearly stated they were building for the Camaro crowd as a kind of Camaro Truck. But then they over-engineered it and pumped it up into the Corvette price range, completely missing their intended target.

  • avatar
    NMGOM

    TTAC: “What prompted the shift in thinking? Diesel, and the public’s growing distrust in compression-ignition engines.”

    What? Where did this TTAC nonsense come from?
    I know of NO evidence that the so-called “public” in the USA distrusts diesel, especially for pickup trucks.
    Diesel has always been a slow-growing market here, but it has been INCREASING in the past decade**
    And I certainly have seen no data or pols that the “public” has any dismay about ICE’s in general!

    You need to back up your fantastic allegations, Steph Willems….
    Or is this one more example of sloppy, amateurish, biased journalism on TTAC’s part?

    ————
    **
    http://www.straight.com/life/488946/north-americas-diesel-car-market-growing
    http://www.dieselmechanicguide.com/diesel-engine-market/
    ————

    ===========================

    • 0 avatar
      DenverMike

      For automakers looking for CAFE solutions, diesels are a weak tool in their handbag.

      Never mind diesel “pickup trucks”, they’re a different story. For buyers of those, nothing compares to the way diesels tow/haul and engine brake, especially for use on steep grades and high elevations where a (non turbo) gas engine loses “much more” of what little hp/tq it showed up with.

      When talking “passenger cars”, diesels are far less “trusted” (OR NEEDED!) by the American public. For those seeking a highly economical or “green” alternatives to gasoline engines, diesels are low on that list.

      So ultimate “fuel economy” is the main reason for choosing a diesel car, right? I mean, other than the “road performance” angle, or those just wanting to be “different” from the crowd, with a curiously ratting “oil burner” (conversation starter), under the hood of an everyday Fusion or something. True or not true?

      Diesel “passenger car” sales may be steadily growing, but they’re still a relatively small percentage of the over all, passenger car market. Except your sources provided are old articles, pre VW fiasco. Automakers that are bringing new diesel choices, may have had them in the development pipeline even before the VW mess.

      But Americans can “trust” a diesel just won’t save them any money “when the dust settles”. At the pump yes, but over all, no. And they can trust the diesel will cost exponentially more to maintain and repair, in the unfortunate event they keep it after the factory warranty runs out. Some of those “dealer only” emissions parts, you’d better hope they’ve covered under some policy or coverage.

  • avatar
    DonInYYC

    When interviewed at the Hungarian F1 race, he hinted that Maserati would be the electric brand within the FCA stable.

  • avatar
    dmoan

    Maybe he should focus on making reliable vehicles before jumping to more hybrids or EV.

    • 0 avatar
      Vulpine

      And what makes you think FCA’s products are unreliable outside of obsolete personal reputations and biased review magazines? I’ve found them to be significantly better than their obsolete reputations OR CR and JDPower state. So have many other owners and certain FCA products are among the top sellers in their respective classes.

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