Maserati Going Electric, Ram Coming to NAIAS, FCA CEO Says

The next two new Maserati models under development, expected after 2019, will have electric motors as part of a plan to electrify the premium brand’s lineup, said Fiat Chrysler Automobiles CEO Sergio Marchionne. By 2020, more than half the Maserati fleet could be electric.

It is a significant pronouncement from the man who fought EVs for years and even told buyers in 2014 not to buy the Fiat 500e electric car because he was losing money on each one. But on a conference call to discuss FCA’s second-quarter earnings, the CEO said he has been monitoring the landscape—and the Tesla business model in particular—and has concluded electrified vehicles can be viable and represent the future of the industry. Diesels coming under scrutiny in the wake of the Volkswagen cheating scandal and an overall regulatory clampdown on the technology have likely permanently weakened the long-term prospects for the oil burners.

More details about the Maserati move to electrified vehicles will be revealed in 2018 when FCA holds another Investor Day to release the next five-year plan covering the period from 2018 to 2022. Marchionne, 65, will attend the Investor Day, which will be in the first half of the year. But he will not be around to see it through, having announced his intention to retire in early 2019.

And when he’s done, he’s done. While he plans to stay on as CEO of Ferrari and chairman of CNH and vice chairman of Exor, he won’t stay on as FCA chairman or advisor, stressing he will have “zero involvement.” But he will be active up to that point. The FCA successor will come from within FCA where potential candidates are currently being groomed, and he insists his replacement will be as capable, or more capable, than he is.

While he said it is not productive to talk about prospects, the short list is expected to include Richard Palmer, the chief financial officer who led off the earnings call that normally starts with a preamble by Marchionne. Other candidates are Mike Manley who oversees Jeep, Ram, Asia, and international operations; Alfredo Altavilla, chief operating officer for Europe, Africa, and the Middle East and head of business development; Reid Bigland, head of Alfa Romeo, Maserati, Canadian operations, and U.S. sales; and Chief Technology Officer Harald Wester.

His successor will have had a heavy hand in formulating the latest in a series of five-year plans since Marchionne took over in 2009. And the CEO job could be restructured. Marchionne recognizes he fell into the top job in an unorthodox way. He took over a merged Fiat and Chrysler as part of the government’s required bankruptcy restructuring in return for much-needed government loans in 2009 to keep Chrysler afloat. His successor will likely steer the ship differently.

The next plan will also reflect FCA’s soul-searching into what is needed to boost shareholder value. Marchionne wants to eliminate the company’s debt by the end of 2018, leaving FCA well-positioned to generate greater profits.

“We need to determine if all the parts of FCA are needed to run the business,” Marchionne said. The company needs to be whittled down to its purest form to deliver best shareholder value and those actions will be discussed during Investor Day.

The spinoff story is not over at Fiat Chrysler, Marchionne told investors. FCA has already spun off Ferrari and CNH, which makes agricultural equipment. He hinted during the conference call that Magneti Marelli, the auto parts supplier, is being considered to spin off. He was also asked about separating Alfa Romeo and Maserati, two premium brands that are enjoying renewed success right now. It is possible, he said, but not immediately likely. He is not convinced Maserati could survive as a standalone company with the high cost of technology required as the industry heads towards autonomous driving.

The growth of Maserati was a contributor to record second-quarter earnings of $1.35 billion on net revenue of $32.7 billion. The strong results follow a record first-quarter. Maserati sales will continue to climb with the introduction of the brand’s first SUV, the Levante, and a second utility vehicle is coming to better justify the investment in a new platform.

FCA also increased overall sales in Latin America and Europe. Sales were off pace in North America where FCA no longer sells small and midsize cars, and volumes were also down with the launch of the new Jeep Compass. CFO Palmer said the Jeep shortfall will be made up in the third quarter when dealers have a full supply of the compact SUV.

Jeep is on a path to sell 7 million vehicles a year globally—or 20 percent of total global sales, Marchionne said. It will take a few years—Jeep sold about 1.4 million in 2016—but Marchionne is confident Jeep will accomplish it. He also reassured the new Wrangler will be as profitable as the one it replaces.

In other product news, Marchionne confirmed the new Ram pickup will be unveiled in January at the North American International Auto Show and go on sale shortly after.

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