News analysis: Can Fiat-Chrysler meet challenges in betting big on new electric Fiat 500?

Source: Xinhua| 2019-07-16 21:21:11|Editor: xuxin
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ROME, July 16 (Xinhua) -- Italian-American automaker Fiat-Chrysler announced it will make a big bet on the electric version of its iconic Fiat 500 car, the company's first major move into the sector that came just weeks after its proposed merger with French rival Renault fell through.

The timing of the two events is not a coincidence. The 35-billion-euro (39.3-billion-U.S. dollar) Fiat-Renault merger would have created the world's third-largest automaker, and the combined company would have also had a significant presence in the electric vehicle market thanks to Renault's long-term investments in that sector. Without Renault, Fiat-Chrysler is staking out a niche in the sector on its own.

It is significant that Fiat-Chrysler will use the historic Mirafiori plant in Turin, the 80-year-old plant that was at the center of Fiat's rise as an Italian industrial power.

Over its long history, the Mirafiori plant has produced around three dozen different types of automobiles but the first was the original Fiat 500, called the "Topolino," named for the iconic Disney cartoon character Mickey Mouse. Now it will be used to produce the most technologically advanced version of the Fiat 500 to date.

"The electric Fiat 500 is strategic from two points of view," Paolo Bricco, author of a book on Sergio Marchionne, the main architect of the merger between Italy's Fiat and United States-based Chrysler, told Xinhua. "The first is because it revitalizes the nearly-unused Mirafiori plant, and the second because it creates a new layer for the young and in-fashion Fiat 500 brand."

The company's initial investment in the car, to be called the Fiat 500e, will be worth 700 million euros (785 million U.S. dollars), according to a statement from Pietro Gorlier, the chief operating officer for Fiat-Chrysler's operations in Europe, the Middle East, and Africa. The investment is part of a wider plan for Fiat-Chrysler to invest at least 5 billion euros (5.6 billion U.S. dollars) in Italy over a two-year period ending in 2021.

The plan calls for production of the new vehicles to start in the second quarter of next year, with an initial production run of 80,000 cars.

The new Fiat 500e is not the company's first electric car: the company did release a limited edition electric Fiat 500 in the United States in 2014, but that vehicle was released mainly to satisfy laws in the United States that required every carmaker to produce at least one zero-emission vehicle. Fiat did little to promote the vehicle and Fiat reportedly lost thousands of euros on each car sold. The new car will be completely re-engineered and will be sold at a profit, Gorlier said.

The big question is whether Fiat-Chrysler will be able to carve out a niche in the market for small electric vehicles after giving rivals a head start of a decade or more.

"The only way for the Fiat 500e to make sense is if the market for electric cars grows very quickly," Giuseppe Berta, a contemporary history professor at Milan's Bocconi University specializing in industrial history, said in an interview. "Fiat-Chrysler will have to develop infrastructure for maintenance and recharging of the vehicles, and it will have to earn a slice of a growing market."