We’ve reported on comments by GM and Nissan officials about the recent unveiling of the Tesla Model 3 and the following storm of reservations. While Nissan CEO Carlos Ghosn had a normal and decent reaction to the event, GM’s Vice President of Global Propulsion Systems, Dan Nicholson, was significantly less gracious than his colleague.
But now it’s Fiat Chrysler CEO Sergio Marchionne’s turn to comment and he doesn’t disappoint.
The FCA executive is known to make controversial comments on electric vehicles. He once pleaded customers not to buy his Fiat 500e because he was losing money off it. He generally recognizes the need for zero-emission vehicles, but he has been publicly skeptical about any business case for EVs.
Marchionne was at the FCA shareholder meeting in Amsterdam today (via Reuters) and commented on the number of Model 3 reservations, which is approaching 400,000 as we reported yesterday:
“I am not surprised by the high number of reservations, […] But then the hard reality comes in … making cars, selling them and making money doing so.”
He then claimed that FCA could build a Tesla Model 3 competitor within 12 months and “add Italian style” in the process, though he wants Tesla CEO Elon Musk to prove the company can make a profit selling it first:
“Marchionne said he did not understand how the Model 3, Tesla’s first mass-market car, could be sold for 35,000 euros ($39,600) at a profit.
“If he can show me that it can be done, I will do it as well, copy him, add Italian style to it and put it on the market within 12 months,” he added.”
Tesla made it clear that they aim to achieve the Model 3’s $35,000 base price through economy of scale in their vehicle manufacturing process, but also through a 30% battery cost reduction with the Gigafactory.
Batteries represent a significant part of an electric vehicle’s cost. While most people would agree that FCA could probably deliver a new vehicle in 12 months, I’m not sure most would agree that they could deliver a giant battery factory in 12 months.
FTC: We use income earning auto affiliate links. More.
Leaving aside the attractiveness of the Supercharger network, which only Tesla brings to the table, the Gigafactory is really the ace-in-the-hole. If it can bring down battery prices as advertised, then Tesla has a 3-5 year lead with a car that still won’t ship for another 1-2 years.
Good luck Mr Marchionne! Given how many years any car is in design/development, 12 months is not practical for any car company. Even if FCA used an ICE from their lineup getting tooling, materials, and a design all squared away would be 2 years minimum. How about coming up with a compelling car of your own rather than waiting for your competition to prove sales are possible in that segment and then following up with a too little to late, lack luster Fiat based car.
The sad thing is, as delusional he sounds like he is, other big car company boards are roughly with the same mindset. They are waiting until the tech matures and think they will just jump in and reap the benefits the easy way. The problem is, EVs are an ecosystem. They need battery factories, supply chains, thousands of chargers throughout the world, and an army of software developers unhindered by big corporate bs. As much as they think they are letting others clear the path and do the hardwork, they are falling more and more behind. With statements like this, TSLA stock never looked so good.
So true. The car manufacturers that are smart, are scrambling to develop their EV program now. The ones with the same attitude that FCA has, will no longer exist in the near future. I predict EVs will quickly take over the landscape.
I agree with all of you, Nissan, BMW and someother companies caught the idea, and will get on the board, but others will face the same fate as Nokia.
Typo: “he once plead” should be pleaded of begged. Sergio is an idiot. An electric Ghibli or 300 wouldn’t hurt, though. But really, Jeep is up 21%. SUV/CUVs make them money. I just wish he and FoMoCo would send a 2 or 3 billion $$$$ to Tesla to gain access to the SC network. They should buy their batteries and motors from Tesla.
He can never make a profit with EVs – he would always have a loss from his un-sold ICE cars displaced by his EVs.
Can he make it so I don’t have to buy it from a dealership in the next 12 months as well?
Admit it automakers, you were caught with your pants down.
He can also make pigs fly in a fortnight.
Marcionne along the other ICE CEOs are caught in the Innonator’s Dilemma. They have 100s of $Bs tied in the ICE industry. They have to meet quarterly profit estimates of WS. Can not afford to spend $10B in BEVs new designs, manufacturing, SCs, GFs, etc. By the time they wake up, it will be too late. When there is change in tech, the incumbents go into the scrapyard of history. Motorola, Nokia, Black Berry? Any of the horse carriage makers around?
Look at the reservations: 400,000 in 2 weeks. It will be > 1M long before first M3 is shipped. Not even Elon expected this demand. ASP will have to go up to $50-60k with options. Not enough time to nickel and dime from internal cars flow to pay for capex. Tesla will have to raise $5+B via equity. Another $5B with debt.
I agree but help out here. What does ICE stand for
Internal Combustion Engine
Tony H is right. I really prefer the term “fossil cars”. It embodies the issues completely and on many levels at the same time.
ICE is used on the forums and in other places as in ICEing the supercharger site. Its illegal in some states
What does he mean by “add Italian style to it”. What is “italian style”?
Many cars over the years have used Italian Designers/Stylists. Well, mainly those sold in Europe. The USA is a very different market. Fugly rule there IMHO
Some of the styling was good, some Meh and some downright ugly.
Go google Bertone, Pininfarina, Ghia etc and make your own mind up.
I present you – the words of an innovator.
Well, I guess not.
He makes me feel ashamed to be Italian… His words are only an emblem of arrogance and failure
Fiat/Chrysler + Toyota seem to be final frontier, stubbornly refusing to admit that EVs are arriving by force and the last to join the game will suffer major market share losses (Toyota can say goodbye to their #1 rank in volume by 2020)
Yes, the traditional fossil auto makes are in denial. That is typical of incumbents when tech changes. Their efforts are lame and geared to compliance cars. The fossil business is generating hundreds of $Bs including OEMs, supply chains, dealers, oil companies, oil service, etc.
What is holding Tesla back is limited capital. They need $10B to disrupt the auto biz completely. Design a crossover based on Model 3, build $5B factory to output 1M Model 3 and crossovers plus increase the GF, 4x the supercharger sites and destination chargers.
$10B is not much these days. FB paid $22B for whatsup. Moto was bought for $10+B. $10B is extreme for Tesla, but would like to see Tesla raise $5B in equity now, while markets are receptive. $9B worth of shares are short. May be they would like to buy a secondary? (Joking).
Sergio, have some dignity and build your own car
Signore Marchionne needs to comprehend that the question is not whether Elon Musk can make the Model 3 profitably, it is “Can Sergio Marchionne make a similar Fiat profitably?” There is a saying in America, “Lead, follow or get out of the way!”. Sr Marchionne needs to choose which path is for him.
Marchionne exhibits early Stages of Grief:
Part of him is in Denial about the woes for him that the 400,000 Model 3 reservations foretell and the other is in Anger, attempting to trivialize Tesla’s accomplishments like they were Sour Grapes:
It’s hard not to feel Schadenfreude about Marchionne.
Can anyone tell me why the phrase “giant asshole” comes to mind when reading his comment?
Making a list of retarded automotive CEOs. So far, Audi for the “not so fast Tesla” retracted article, Toyota for publicly dismissing battery EVs while facing the Model S success (and then coming with a hideous battery EV concept), BMW boss for banging his head at Model X door while calling it a “prototype”, now Fiat for the lack of basic understanding how the industry works.
Most of these comments don’t make sense.
1. This is what Elon Musk wants, he has said this from the start. For him, it has never been Tesla Vs World, he wants the big manufactures to switch over. Most of these manufactures sell upwards of 200k cars a MONTH, 400k reservations is kind of adorable, especially because putting up 1k is different than spending 35k. We don’t know what the turn over will be yet. Honda alone sold 4.3 million cars in 2015. Assuming Tesla actually has a high conversion rate at their reservations, their sales are still a fraction of the total auto market.
2. Tesla has made all their patents available for free, again, this is public knowledge. There would be literally no R&D and for any of these ICE manufacturers.
3. Tesla would sell batteries to the large auto companies, there is more money in that than the actual cars because batteries have an expiry date unlike EVs which compared to other ICE vehicles have a much longer life span.
4. Elon’s love is space travel, he wants the world to switch to EV so he can focus on what he loves. Again, he has been public about this.
“This is what Elon Musk wants, he has said this from the start. For him, it has never been Tesla Vs World, he wants the big manufactures to switch over…. Assuming Tesla actually has a high conversion rate at their reservations, their sales are still a fraction of the total auto market.”
“400k reservations is kind of adorable”
Makes no sense. Yes, Tesla cannot transition the world to sustainable transport by themselves (see above). But dismissing 400K reservations for a car in less than a month, is just silly. Remember 115K reservations were made pretty much sight unseen. Sure, some of those were employees that had an idea what they were getting (along w/ informed self interest). But around 100K of those reservations were from people that had purely rumors to go on, and still put down $1000 per reservation. Even a modest conversion rate of 50% at this point still comes out to Billions of dollars in revenue.
GM last year sold 9.9 million cars. That divided by 12 is nearly 800k per month. These are not reservations, these are actual sales. This is only GM, the other auto makers do similar numbers.
It’s an accomplishment because they are a new car manufacturer and it is for EVs, but it is a very small fraction of the auto market. Maybe I shouldn’t of said ‘adorable’ because that is condescending, but that is exactly how all the big OEMs view Tesla.