Chrysler to Lose $10,000 for Every Fiat 500 EV it Sells

Chrysler will begin selling an electric version of the Fiat 500 next year; however, rather than profiting from each model delivered, the automaker will lose nearly $10,000 for every unit it sells.

Under license from Fiat, Chrysler builds the subcompact 500 at its plant in Toluca, Mexico. As it stands, the only form of propulsion available for the 500 is Fiat's MultiAir 1.4-liter I-4, but starting next year an electric-driven model will join the U.S. lineup. Despite moving forward with the alternative-powertrain, company officials remain skeptical of EV viability in the marketplace.

"The economics of EVs simply don't work," Fiat CEO Sergio Marchionne said at the company's general meeting last week. "On the 500 that Chrysler will begin selling in the U.S. next year, we will lose over $10,000 per unit despite the retail price being three times higher [than the gasoline-powered version]."

Base model 500s sold here in the United States start around $16,000, which means the electric versions will likely carry a price tag just below $50,000 -- or closer to $40,000 with the $7500 federal tax rebate for plug-ins and electrics. The latest news of the 500 EVs price is a vast departure from the figure Marchionne gave when a concept of the model was first unveiled at the 2010 Detroit auto show. At that time, the EV was expected to retail for around $32,000, just double that of a gas-powered model.

Regardless of the higher price and planned losses, Chrysler and Fiat will continue to push forward with the model, which serves as an avenue for it to expand its knowledge on electric powertrains. Chrysler noted its financial impact will be limited as the model is slated for low-volume output. European deliveries of the 500 EV are expected to begin sometime in 2013, with losses consistent with that of the U.S.-bound model.

Expected to retail for some $15,000 more than the Nissan Leaf, do you think Chrysler will have a difficult time selling the 500 EV? Share your thoughts in the comments section below.

Pro-EV/Anti-EV sentiment aside, something simply doesn't make sense here. Is Marchionne really saying that the drive train components for these vehicles cost $44,000? Seriously? I understand that they are more expensive but that just seems...incompetent. I do like the 500, I think it is a nifty little car that I could see buying. But I'm not going to pay $50,000 for an EV 500. If there is someone out there that is willing to pay 50K for an EV 500 then it is a vanity purchase and they almost certainly would be willing to pay $60K for it, making it break even. Who the hell in management came up with the idea to sell a seriously overpriced vehicle for a 10K loss? I can't believe the tooling changes would be that significant if you are already going to manufacture the gasoline 500, is this the result of dis-economy of small-scale? It seems like they are trying to make this a failure. Perhaps this is a tax write-off tactic. Oh, no, wait. I know what it is, it's the high cost of labor in Mexico, right? Must be the unions again....
Like most newer technology, there is an adoption curve and ramp-up for mass-production efficiencies. Frankly, I'm disgusted with the ever-fluctuating price of gasoline, the smell of corruption that surrounds big oil and legislation (and legislators) affecting it, the huge profit-taking by big oil, the unhealthy sovereign dependence upon foreign oil , the ecological impact of fossil fuels, the cost of maintaining a gasoline-powered vehicle, and the mis-information that is prevalent around the industry. I'm interested in a second vehicle that would be an EV, but the costs need to come down. How a car manufacturer can lose $10,000 on a dinky little car at close to $50,000 is difficult to understand.
Prima Edizione Rosso
+1 to the above post. EV vehicles make zero sense. I read you'd have to drive the Volt some 76,000 miles before any of the 'benefits' of EV to the environment materialized, in terms of carbon footprint... what's the point?
Yes, as Senor Marchionne just stated, EVs make NO ECONOMIC SENSE. I feel we will look back in contempt of these hastily put together street-legal golf carts, especially when GM and Chrysler/Fiat will need yet ANOTHER taxpayer bailout to pay for the impending boondoggle of the Volt, 500EV, Leaf, etc. High fuel mileage gas engines are the wave of the future, and I think this period of automotive history will be on par with 'Lean-Burn', smog pumps and Yugos. I'd rather not drive than drive these wastes of metal, plastic and lithium ion.

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