Electric Vehicles: Fiat’s Agony

I’ve mentioned the growing concern over Fiat’s future a few times now, most recently here.

The Financial Times has more detail here:

At 21, Gianluca Rindone got his first job making bodies for Fiat’s Maserati cars alongside his father, a Sicilian who had been lured to Turin’s auto boom in the 1970s. He thought it would be a lifelong career but after three decades Rindone has been furloughed, falling victim to the carmaker’s decision to suspend production at its last Turin factory . . .

Rindone’s own sons — aged 15 and 8 — are unlikely to follow his path into Fiat’s workforce, he says. “If there is not a job for the father, how can there be a job for the son?” frets the 48-year-old, who is relying on help from his retired parents to pay his mortgage and bills. “When you see a factory with nearly 100 years of history stop, the heart cries. If Stellantis [Fiat’s parent company] goes, Turin dies. It’s as simple as that.”

The FT’s Amy Kazmin reports that Rindone’s complaint is echoed across Europe “as the continent’s auto industry — and its 14mn jobs — faces an existential crisis, squeezed between the soaring costs of developing cleaner vehicles to meet the EU’s tough emissions standards and the cheaper models from Chinese rivals.”

Missing from that sentence are the words “electric vehicles,” which is what she is referring to, although Kazmin is right to describe them as “cleaner” rather than clean. And while it is true that the EU’s emissions targets are “tough” (indeed they are: they are meant to stop the sale of new conventional cars from 2035), it might have been helpful to add a few more words, such as “and largely pointless.”

Again, Kazmin is correct to describe the EVs sold by Chinese cars as “cheaper,” but it is worth adding that that “cheapness” is largely possible on the back of the subsidies provided by Beijing’s mercantilist regime. The EU has finally reacted by voting to increase tariffs on imports of Chinese EVs, but not, probably, by enough.

Kazmin goes on to sketch out the extent of the threat posed by Fiat’s woes to Italy’s government and the country’s “fragile” finances, points well worth making. If Italy should run into major financial difficulties, there’s a good chance that those difficulties may unsettle the eurozone. Maintaining a shoddily constructed currency union is not easy. What’s more, if Italy’s government does run into trouble thanks to the problems arising out of the coerced switch to EVs, it won’t be the last to do so.

According to Kazmin, the auto sector (including components suppliers) accounts for about 5 percent of Italian GDP and employs 250,000 people. Car production in Italy has already fallen by about a half since 2018, suggesting (obviously) that the sector was in trouble. Adding to its misery seems . . . unwise.

As noted here late last month, Italy’s industry minister, Adolfo Urso, has again repeated his call for extending the EU to extend its 2035 deadline — pause for a moment to consider the humiliation of a (supposedly) sovereign nation forced to beg for permission from Brussels to preserve a key industry. Stellantis’s CEO, Carlos Tavares, who in the past has questioned the wisdom of the EU’s EV mandate, disagrees with Urso’s call, arguing that it is “better to work hard to comply in the most efficient manner” with Brussels’s diktat. At the same time, he is complaining that Italy hasn’t spent enough on subsidies to entice consumers to buy EVs. If his company is manufacturing products so unsatisfactory that customers have to be bribed to buy them, he should be in another business.