FCA plans to invest $788 million in ‘Fiat 500’ vehicle production

Fiat Chrysler (FCA) plans to spend 700 million euros ($788 million) to boost the ‘Fiat 500’ electric production as the carmaker moves on from its failed $35 billion bid to merge with France’s Renault, a pioneer in electric vehicles.

President of the Piedmont region Alberto Cirio, Turin mayor Chiara Appendino, CEO of FCA Group EMEA Pietro Gorlier, Prefect of Turin Claudio Palomba and FCA Head of Manufacturing EMEA Luigi Galante attended the inauguration of a new robot manufactured by Comau, on the assembly line of the Fiat 500 BVE at the Mirafiori plant in Turin on Thursday.

Pietro Gorlier announced the Italian-American company’s biggest single bet on an electric vehicle during the function. FCA’s investment is part of a plan announced last year to spend 5 billion euros in Italy up to 2021.

Gorlier told reporters that FCA had started building the new production line at Mirafiori to turn out 80,000 of the new 500 BEV, its first battery electric vehicle to be marketed in Europe.

The original 500 model, launched by Fiat in the late 1950s and known affectionately as the “Cinquecento”, quickly become a symbol of Italian urban design.

Mirafiori’s 3,500 workers are hoping the new electric mini-car will revive a plant which LMC Automotive estimates is running below 10% of its capacity this year. Workers in Fiat’s home town are also betting on the hybrid version of Maserati’s Levante SUV, on which production is expected to start next year, to help boost their working hours.

An early version of the electric 500 has been produced in the United States to comply with local authority rules on zero-emission cars. But former CEO Sergio Marchionne asked customers not to buy the car in 2014 as FCA was losing money on it, and said he hoped to sell the smallest number possible.

Production of the newly-engineered 500 BEV will start in the second quarter of 2020, with room to expand later, Gorlier said.

The 500 BEV will compete in the upmarket small car segment with BMW’s Mini. The German company said this week the new electric version of its compact car would start to reach customers from spring next year.

In abandoning its merger offer for Renault, FCA blamed French politics for scuttling what would have been a landmark deal to create the world’s third-biggest automaker.

Meanwhile, an expanded alliance between Ford Motor and Volkswagen that includes a partnership in Ford self-driving unit Argo AI could redraw the balance of power in autonomous vehicles.

A Ford-VW collaboration with Argo, the Pittsburgh-based start-up that has spearheaded Ford’s self-driving development since 2017, could help reduce the engineering and financial burdens on each automaker. It could also accelerate the deployment timetables of both, which have said they plan to put autonomous vehicles into operation in 2021.

Argo has been overlooked as Waymo, Alphabet’s self-driving subsidiary, has deployed its robo-vans, and General Motors’ Cruise Automation subsidiary has raked in billions of dollars in investments.

With VW, the world’s biggest automaker by sales volume last year, Argo would be aligned with a partner with substantial scale and resources.

Ford and VW said on Thursday they are expanding their global alliance and that the two companies’ chief executives would hold a news conference in New York on Friday, where they are expected to announce details on a technology-sharing agreement.

A Ford-VW deal that involves Argo could also have broader implications for similar alliances, as well as valuations of related start-up companies.

Earlier estimates of Argo’s value have ranged from $2 billion to $4 billion. Depending on the size of a VW investment, that valuation could rise to $7 billion, according to a source familiar with the Ford-VW discussions.

In comparison, the value of Cruise jumped to $19 billion earlier this year after it attracted more than $6 billion in investments from SoftBank Group, Honda Motor Co and T. Rowe Price.

The value of ride services firm Uber Technologies’ Advanced Technologies Group climbed to more than $7 billion earlier this year after SoftBank, Toyota Motor Corporation and Denso Corporation invested $1 billion.

Those valuations are dwarfed by the estimates for Waymo, which is widely acknowledged as the sector leader. Morgan Stanley values Waymo at up to $175 billion, while Jefferies values the company at up to $250 billion.

Both estimates take into account Waymo’s nascent robotaxi business and potential future revenue streams from a delivery service and from streamed in-vehicle services, including e-commerce and infotainment.

VW, whose Audi unit heads the German automaker’s Automated Intelligence Driving (AID) unit in Munich, reportedly considered a $13.7 billion investment last year in Waymo for a 10 per cent stake that would have valued Waymo at $137 billion.

Reuters