Marchionne: Chrysler to embrace hybrids to meet mpg rules

At full capacity, the Tipton, Ind., plant will be able to ship about 800,000 transmissions annually.

UPDATED: 5/13/14 4:42 pm ET

TIPTON, Ind. -- Fiat Chrysler Automobiles CEO Sergio Marchionne said today that Chrysler Group increasingly will have to turn to electrification of its vehicles to meet the government’s rules requiring cars and light trucks to average 54.5 mpg by the 2025 model year.

But Marchionne also said that the company -- ranked last among large automakers in the United States for car fuel economy in 2013 -- is on track, internally, to meet long-term the government’s latest fuel economy requirements.

Marchionne addressed reporters here as Chrysler dedicated a $162 million transmission plant to build a nine-speed automatic transmission that will underpin almost all of its future front-wheel-drive vehicles. With the nine-speed automatic, the redesigned 2015 Chrysler 200 sedan is expected to achieve up to 36 mpg on the highway.

“The house will make it” to the 2025 model year fuel economy targets, Marchionne said. “Hybrids become a very large component of that fleet. You can’t get it without the hybrids. It’s impossible.”

Since 2009, Chrysler Group has sought to reduce its lineup of engines and transmissions from what Marchionne called “a collection of mutts” to a set of standardized powertrains that can be used across its product portfolio. It uses an eight-speed transmission to power most of its rear-wheel-drive light vehicles, and is transitioning to the nine-speed automatic for fwd vehicles.

Chrysler launched the nine-speed transmission -- which is licensed from ZF Friedrichshafen and built here and in Chrysler’s massive transmission complex in nearby Kokomo, Ind. --- in 2013 on the 2014 Jeep Cherokee.

The 2015 Chrysler 200, which the company began shipping to dealers on May 2, is the second Chrysler Group vehicle to use the lightweight, fuel efficient transmission.

Chrysler bought the 782,000-square-foot Tipton plant, about an hour north of Indianapolis, in February 2013 to expand production of the nine-speed transmission. The building was constructed originally to house a joint venture between Chrysler and Getrag, but that project was abandoned in 2008 before Chrysler’s bankruptcy.

The Tipton plant now employs 204, and employment is expected to rise to about 850 by late 2015 as nine-speed transmission production expands.

In other comments, Marchionne said that locating Fiat Chrysler Automobiles’ headquarters in London, as is now planned “is irrelevant” to the way the company will operate. The London offices will host board and group executive council meetings, but little else, he said.

“I can’t run a company through an iCloud,” Marchionne added.

Marchionne refused to answer a question about how the company planned to build 200,000 additional Jeeps in North America by 2018 when two of its four Jeep assembly lines are nearly maxed out now. He said executives continue to study the issue, but would not rule out expanding some Jeep plants to address capacity constraints.

The CEO also said that the decision to fold the fledgling Street and Racing Technology, or SRT, brand back into Dodge was made because “SRT is a natural extension of Dodge,” as Dodge is recast as Chrysler Group’s performance brand. He would not say whether the Viper would return to a Dodge badge.

Marchionne said: “The fangs will stay.”

You can reach Larry P. Vellequette at -- Follow Larry P. on Twitter: @LarryVellequett

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