By Peter M. DeLorenzo
Detroit. After celebrating the 20th Anniversary of Autoextremist.com three weeks ago, this week marks another milestone for this publication – our 1000th issue. That’s quite a number and quite an achievement by any stretch of the imagination, and needless to say, we’re very proud to still be bringing AE to you every week.
As I’ve said repeatedly, this business is a swirling maelstrom, a kaleidoscope of the good, the bad and the ugly punctuated by fleeting moments of brilliance by the True Believers of all stripes. And this week is no different.
First of all, how crazy is the FCA saga getting? When the merger between FCA and Renault – you know, the one that everyone was so certain of – blew up after FCA Chairman John Elkann walked away from the deal, the hand-wringing was only just beginning. There are so many more dimensions to the story that it’s dizzying. There’s Renault, but then there’s the French government too. Those two players alone are enough to give any notion of a merger a stiff headache. And then there’s Nissan, whose nose seems to be permanently out of joint because, in the parlance of Rodney Dangerfield, they just can’t get no respect.
Now there are rumors of the talks being revived, with Nissan wanting a much larger cut of the action. One thing that hasn’t changed in all of this is that the clock is ticking on FCA. Beyond Jeep, Ram Trucks and its muscle/police cars the company is clearly not positioned for the future because it is woefully lacking in advanced technology. And the whole idea of merging with another automotive partner is designed to fix that.
Make no mistake, I believe a deal will be made, simply because FCA has no other choices – or interested partners – and time is running out. Any merger with any company will be fraught with problems and unforeseen challenges, and the sooner FCA can get a deal and set about figuring things out with its new partners, the better off it will be. That’s not to say things will go swimmingly well, because they rarely do with heavyweight corporate egos in play. But at this point FCA has no choice; the company must make a deal for its long-term survival.
But as if that weren’t enough, in the midst of all of this angst one of FCA’s top executives has thrown a giant wrench into the works. U.S. sales chief Reid Bigland filed a whistleblower lawsuit against FCA on June 5, suggesting that other top FCA executives were trying to make Bigland the scapegoat for its fraudulent sales reporting practices that embarrassed the automaker – and Sergio Marchionne – two years ago. FCA has withheld 90 percent of Bigland’s pay, according to the lawsuit, and deferred his 2018 annual bonus and stock share dispersal indefinitely in retaliation for cooperating with a U.S. Securities and Exchange investigation into FCA’s sales reporting shenanigans. That this dovetails with the usual chaos – which is standard operating procedure – out in Auburn Hills can’t be disputed, but even this is cause for alarm to the outside investor community. And one more reason that FCA needs a deal, even if it’s just to keep the Bigland lawsuit off of the news cycle for a while longer.
Oh, but that isn’t all of the bad news for FCA. As I suggested last week in my Brand Image Meter column, the writing is on the wall for the demise of the Fiat brand in the U.S. market. You remember Fiat, don’t you? The brand that The Great Sergio promised would set the table for dealers to accumulate vast riches, because it would lead to 75,000 in annual sales by 2013? Well, it seems that Fiat sales peaked at a little more than 46,000 five years ago, and at its present sales rate Fiat will be lucky to sell 10,000 vehicles this year. Or, if you’re counting, that is one-tenth of 1 percent of the U.S. market. The outcome of the Fiat sales adventure in the U.S. wasn’t a surprise to me in the least, but I do feel sorry for the dealers who were unlucky enough to buy into Marchionne’s pitch, hook, line and sinker. They’re crying the blues right now and lamenting the fact that they collectively lost a ton of money on Fiat. It sucks to be them, in fact.
As I said in the beginning of this column, there are fleeting moments of brilliance that punctuate the gathering darkness. And it appears that the True Believers at Toyota are about to unload some serious mojo on the efficacy of BEVs.
Lost in FCA’s non-merger news last week was the fact that Toyota is not only moving its corporate BEV strategy up five years, it announced that it is planning to unveil a solid-state battery before the Summer Olympics in Tokyo in 2020. Even casual observers of the electrification push that is happening around the world know that the weakest link of current BEVs are, in fact, the limitations of the battery technology. And the development of solid-state batteries would be a game changer. Why? Because they’re more powerful, safer and most important, lighter. This is serious breakthrough stuff, folks, and it may just be the jump start that the dawn of the BEV era needs.
It’s no secret that much of this industry remains consumed by controversy, conjecture, hand-wringing, bad decisions, rote behavior and the prevailing sense that the good times are about to end with a thud so, in effect, nothing really changes, right? This week would suggest that indeed, nothing ever really changes in this business.
But at the same time, when I hear of promising developments like the solid-state battery from Toyota, something that would transform the promise of mass electrification into a viable reality, well, I am happy to retain at least a shred of optimism.
And that’s the High-Octane Truth for this 1000th issue of Autoextremist.com.
