In December of 2015 it emerged that Fiat Chrysler had the lowest average fuel economy among all automakers in 2014. This was probably no surprise to company CEO Sergio Marchionne, as the automaker relies heavily on Jeep and Ram sales to drive its business, but Bloomberg believes it could soon become a problem.
In addition to having the lowest average fuel economy across its product portfolio, FCA products also finished last in an Environmental Protection Agency ranking of various automakers’ carbon-dioxide emissions. Now the company is left to improve the average fuel economy and emissions of its vehicles before the EPA puts stricter regulations in place for both, and analysts aren’t convinced it has the money to do so.
“FCA doesn’t have the resources to fulfill the emissions requirements,” Maryann Keller, an independent auto industry analyst, told Bloomberg in an interview. “It’s not a company that can survive in its present form.”
The EPA will have capped the allowed amount of average tailpipe emissions at 163 grams of C02 per mile by 2025 and that same year will also require automakers to have an average fuel economy rating of 54.5 MPG. Marchionne recently spoke on the 2025 targets, saying they have the technology to reach 54.5 MPG now, but costs prohibit them from doing so.
FCA currently offsets the poor fuel economy averages brought on by Jeep and Ram by buying up emissions credits from other automakers. It also received more than 13.8 million credits from the EPA between 2009 to 2014 by selling E85 and zero-emissions vehicles and developing more efficient technologies, however the credits will begin to dwindle as EPA regulations get stricter.
Without a merger with a company like General Motors, a partnership Marchionne sought out last year but was denied of, FCA could be in trouble. It currently lags behind GM and Ford in the development of hybrid and other green technologies and isn’t nearly as wealthy. The Pacifica Hybrid seems like a good product, but it will take many more like it if FCA wishes to stay within EPA regulations.