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April 15, 2016 01:00 AM

FCA would build rival to Tesla Model 3 if business case makes sense, CEO says

Luca Ciferri
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    Tesla will sell the Model 3, show, for prices starting at $35,000.

    AMSTERDAM -- Fiat Chrysler Automobiles could build a rival to Tesla's Model 3 compact electric car with Italian flair if the business case makes sense, FCA CEO Sergio Marchionne said.

    Tesla unveiled the $35,000 Model 3 earlier this month and company officials have said this week that advanced orders are approaching 400,000, according to various media reports. 

    "I'm not surprised by the high number of reservations but you have to then build and deliver them and also be profitable," Marchionne said on the sidelines on FCA's annual meeting in Amsterdam today.

    Marchionne said he does not see a way to make the Model 3 profitable at a $35,000 retail price.

    He said that if Tesla CEO Elon Musk "can show me that the car will be profitable at that price, I will copy the formula, add the Italian design flair and get it to the market within 12 months."

    Asked if he thinks FCA is late in the race to electrification, Marchionne replied: “better late than sorry.”

    FCA sells a few thousand units a year of the 500e, an electric version of its 500 minicar, in selected U.S. states. The car is not offered in Europe or other global markets.

    Midsize cars

    Meanwhile, Fiat Chrysler has received interest from carmakers willing to help it build medium-sized cars in the U.S. and may decide on a partner this year, Marchionne said. 

    FCA is looking for partners to build future versions of the compact Dodge Dart and the midsize Chrysler 200 in the U.S. to use more of its own production capacity to manufacture more profitable trucks and SUVs.

    "We have received a couple of overtures and we are analyzing them," Marchionne told journalists after a shareholder meeting in Amsterdam. "We are in no immediate rush ... It may happen as early as this year to have it nailed down."

    FCA last week said it would lay off about 1,300 workers indefinitely and end one of the two shifts at its Sterling Heights, Mich., plant that makes the slow-selling midsize Chrysler 200 sedan.

    Both Sterling Heights and FCA's Belvidere, Illinois, plant which makes the Dart, will be retooled to make SUVs and trucks.

    Marchionne said there was no firm date for when production of those models would stop completely, adding it depended on how long it would take to bring other models to those sites.

    He added: "We will know more by the end of this year."

    Marchionne said he wanted to remain active in the midsize segment in the United States, even though it was not essential to FCA's fortunes. 

    "The midsize car business in the U.S. is in severe decline," he said. "(But) from a range point of view I think it would be important to have a presence in the segment."

    Reuters contributed to this report.

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