Fiat CEO Believes Tesla Model 3 Would Lose

Fiat CEO Sergion Marchionne holds the belief that Tesla would fail to earn a profit from the sale of Model 3

CEO of Fiat Chrysler Automobiles Sergio Marchionne has seriously doubted whether Tesla Motors can earn a profit by delivering its new out Model 3 for a price of $35,000. That vehicle, which has 400,000 reservations since launched in March, is the American electric carmaker’s effort beyond its roots in luxury cars.

While Tesla Model 3 might be a large seller, Sergio is not convinced that it will turn into a source of income for CEO Elon Musk after it begins delivering in the next year. “If (Elon) can show me that the car will be profitable at that price, I will copy the formula, add the Italian design flair and get it to the market within a year,” Sergio spoke to a reporter of Automotive News Europe on the sidelines on the annual meeting of Fiat in Amsterdam on April 15, 2016.  

His views, while snarky, foresee what might happen if the push by the organization gains profit and momentum. Big organizations, such as FCA, will wish to imitate that success weakening the EV maker in that process.

The executive of FCA is known for his controversial comments regarding electric automobiles. He used to plead customers not to purchase his Fiat 500e, which is the electric version of its 500 minicar, due to the loss he was making off it. He recognizes the needs for vehicles with zero-emissions in a general manner, but he has continued to be publicly skeptical regarding any business case for EVs.

When Sergio was asked that if he believes that his company is late, he replied, “better late than sorry.” The EV maker clarified that it intends to attain the $35,000 base price of Model 3 by attaining economies of scale in its automobile manufacturing procedure, but also by cutting down its battery cost by 30% with its Gigafactory.

Batteries represent a crucial part of the cost of an EV. While many people would agree that the carmaker could probably sell a new automobile in a year, I am not sure most would agree that the Italian automaker could establish a huge battery manufacturing facility in one year.

CEO of Nissan Motor Company differed with Sergio by reacting in a decent and manner to the launch of Tesla’s mass-market car. According to Automotive News Europe, FCA delivers just few thousand 500e vehicles in some American states. The vehicle is not sold in the European region or other international markets.

The Model 3 will probably be the first Tesla automobile to be equipped with Tesla’s autonomous driving system. Electrek knows that Musk’s organization is possibly thinking about mobility on demand facility depending upon an answer Elon gave while addressing an earnings call in 2015. Analysts at Wall Street are even taking account of potential new business in their valuation models.