Electric mandates squeeze Chrysler

by Henry Payne

Automakers’ frustration with government mandates that force them to sell electric vehicles is boiling over.

“I hope you don’t buy (the Fiat 500e electric car) because every time I sell one it costs me $14,000,” said Fiat-Chrysler CEO Sergio Marchionne at a Brookings conference last week.

Fiat created the 500e to satisfy bureaucrat — not customer — demands in California and seven other states that automakers make 3.3 million “zero-emission” cars available for sale. The $32,650 Fiat 500e stickers at almost double the base price of a $17,000, gas-powered compact 500. Marchionne went on to joke that Chrysler will need a second auto bailout if he keeps selling such cars.

But the cost to companies like Fiat-Chrysler is no joke.

At a Fiat-Chrysler investor conference on May 6, FCA Powertrain Chief Bob Lee explained to investors that the “overarching driver for powertrain technology change over the next five-plus years” is not customer demand but CO2 regulation.

Get used to the term “compliance vehicle.” Most electric cars are manufactured solely to meet government rules. Lee went on to explain that electric vehicles are not enough, however, because customers won’t buy them.

“Electrification has been overblown by the media,” he said. “With the exception of a relatively small group of early adopters, the market continues to be driven by regulatory requirements.”

That means companies will have to continue to purchase emissions credits. Ultimately, however, sticker prices will rise and engine sizes will shrink as “more costly technologies will be required to meet the regulatory CO2 requirements.” The cost of going green continues to rise — with no discernible benefit.