Dec 20, 2019

The Fiat Chrysler-PSA merger can't solve all their problems

PSA's Carlos Tavares (left) and FCA's Mike Manley. Photo: Courtesy of FCA

Fiat Chrysler Automobiles is merging with France's PSA Group to create the world's fourth-largest automaker, a deal intended to help both companies bear the cost of new technologies like electric and self-driving cars.

The big picture: The merger also gives Peugeot's parent a long-desired entry into the U.S. and will help FCA catch up in fuel-efficient powertrains. "It is better to face the challenges of the future together than on a standalone basis," PSA CEO Carlos Tavares said during an investor call, CNBC reported.

Yes, but: The merged company will have some glaring problems.

  • It will still be overly reliant on the European market, where sales are sluggish and tightening regulations make it more difficult for all players to do business there.
  • And both companies are poorly positioned in China, a combined weakness that's only amplified as the world's largest auto market shifts sharply toward electric vehicles and homegrown brands.

The bottom line: Tavares, who will lead the combined entity, is an industry wizard, but pulling this off will likely be the most difficult challenge of his career.

Go deeper: High-tech cars drive auto loans to record highs in the U.S.

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China hits pause on electric vehicle subsidy cuts

A Tesla Model 3 in Shanghai. Photo: Costfoto / Barcroft Media via Getty Images

China announced it will "not make significant cuts" this year to subsidies on new energy vehicles including electric vehicles, via Reuters, "signaling that its policy will remain relatively stable, state media quoted the country’s industry ministry as saying on Saturday."

Why it matters: EV sales in China, which has the world's largest auto market, dropped sharply after the Chinese government significantly cut industry subsidies in July.

Go deeperArrowJan 13, 2020

Tesla reports record 112,000 deliveries in 2019's 4th quarter

Tesla headquarters in Silicon Valley. Photo: Smith Collection/Gado/Getty Images

Tesla announced Friday that it produced almost 105,000 cars in 2019's fourth quarter and delivered roughly 112,000 — both records for the Silicon Valley electric automaker.

Why it matters: The deliveries substantially beat Wall Street estimates and enabled the company to meet its "ambitious" year-end sales goals, per CNBC.

Go deeperArrowJan 3, 2020

France raises pollution tax on large vehicles

Photo: Sean Gallup/Getty Images

France is aiming to lower carbon emissions by raising its pollution tax on large vehicles with a new law adopted by parliament earlier this week, Bloomberg reports.

By the numbers: Cars that emit carbon dioxide above a certain threshold will be subject to a 20,000 euro penalty — more than the current fine of 12,500 euros. France's finance ministry is projecting 50 million euros annually in revenue from the tax — those yields will be used to support automakers' shift to cleaner energy.

Go deeperArrowDec 20, 2019