Friday, December 7, 2012

Why your next car may cost more than it should.

Image from the FiatUSA website - go visit for more!

I like cars, especially European ones. And Italian cars are my favorite of the Euros. My first car was Italian (Alfa Romeo), my second car was French (Renault), and I've owned a BMW along the way as well. I've also owned plenty of American, Japanese, and Korean automobiles (including a "Suzuki Forenza" - the ultimate amalgam of a worldwide automobile: the car was built in Korea by GM-Daewoo; styled by the Italian design group Pininfarina, although the hatchback version was styled by another Italian, Giugiaro; used an engine made in Australia by Holden, which was based on an old, German Opel design; and sold in America as a Suzuki). I've driven other European cars as well, including Mercedes, Peugeot, Volvo, other BMWs, some Mini Coopers, and a Fiat 500. But I still like Italian cars the best. That little 500 (I test drove a Sport model in B'ham on my way back south from a business trip in Huntsville) was a neat car - certainly not overly powerful, but handled well, and actually rode well on the interstate, too. I'd really like to get my hands on an Abarth model (hey, Christmas is coming!), and/or perhaps the forthcoming 500L. But I want to talk about the 500e for a moment, the Fiat token "electric vehicle" for the states (well, for California, anyway), which will soon be available (Spring of 2013, although, as mentioned, only in California).

Based on this article (and this one backs it up), Fiat USA will not make any money selling the 500e. In fact, they will lose approximately $10,000 on each one sold (pricing has not yet been established, or at least published, but prior indications suggest a $35-40k sticker). Yes, lose money, 5 digits' worth, on every one sold. "So, why would they do this?" you ask. Doesn't really make sense, now, does it? Well, it's the government's fault. California regulations require any manufacturer of a certain size to sell a minimum number of zero-emission vehicles. And hybrids, plug-in or not, or any other "partial zero emission vehicle," do not apply towards this minimum requirement. So, the state of California is requiring limited-range, loss-inducing vehicles to be sold. "What's the big deal? Saves the earth!" you say. Does it? really? Those electric vehicles don't get their power from the sun (well, they could, if your house is on a solar array, but otherwise, it's coming from your local power plant). Some of which may be good ol' coal plants, which (due to carbon trading) typically are somehow exempted from emission regulation (no, I'm not posting any links to back up this claim; you can look it up yourself, and comment if I'm wrong). Alternatively, they're (relatively clean!) nuclear plants, or possibly aero or hydro plants. And they do have limited range, so you'll have to plan your trips accordingly.

But the biggest problem with this "strategy" is the fact that the vehicles are going to cost more than they're sold for. Fiat will have to make that money up somewhere... likely in the sticker prices for their vehicles going up across the board (including Chrysler vehicles, since Fiat owns Chrysler). So, your 5.7L, Hemi-powered, 4x4 Ram Pickup, with its 13/19 EPA rating, is going to cost a little bit more (which you're paying to help offset the price that someone else did not pay on their Fiat 500e).

That's just bad governing, in my opinion. Personally, I think auto manufacturers should just all boycott California and quit selling cars there. Then they won't have to meet these ridiculous regulations and can keep prices low, invest in research and technology, and eventually sell electric/hybrid vehicles at a profit. Perhaps the neighboring states could just open up extra dealerships just across the California borders where Californians could go to buy their cars. Just a thought.

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