Losing $10k per car, making it up in volume

May 21, 2013

Fiat/Chrysler will be soon selling its all-electric e500 in California (only) for $32,500. And if you can put up with all the downsides of a small, battery-powered car, it should be a steal at that price because Fiat/Chrysler will be losing $10k on each car. Sergio Marchionne, CEO of Fiat/Chrysler isn’t stupid. He knows putting the e500 into mass production would be “masochism to the extreme.” And he admits his strategy is to sell just enough e500s to help get the corporate average fuel economy of his company’s offerings up to the congressionally mandated 54.5 mpg by 2025.

But what kind of sustainable, jobs-building legislation encourages companies to lose money? Isn’t this kind of policy slanted toward huge multinationals that can withstand continued losses, hoping the competitive playing field is quickly emptied? And wasn’t it once considered dumping and against all kinds of trade agreements to sell a product in another country for less than it cost to make?

I can’t blame Marchionne and Fiat/Chrysler for taking advantage of poorly written or rarely enforced laws and regulations. He’s just a businessman doing business. It’s our elected officials and their bureaucracy who seem to be falling down on the job.

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