On Thursday, after a round of board meetings the day before, Fiat Chrysler and PSA (Peugeot S.A.) announced that the two will be merging companies which will help share the cost of developing electric vehicles. Under the terms of the merger, FCA and PSA will split the new company 50/50. This new comes after FCA recently declined an offer from Renault to merge. Under the Umbrella of this new corporation will be car brands like Alfa Romeo, Chrysler, Dodge, Jeep, Lancia, Maserati, Citroen, Jeep, and a few more.
The fact that the two companies merging now is no surprise as the car industry is undergoing a massive revolution, namely, electrification. Developing the new platforms, batteries, and powertrains needed for electric cars requires a great amount of investing, and it just doesn’t make sense for the two companies to develop separately when they can co-develop electric vehicles and split the costs. Apparently, this merger will save the companies roughly $3.9 billion, and saves the need to close any plant.
Carlos Tavares, the chief of PSA, will head this new corporation, and will have the hefty task of preparing the company to compete with Volkswagen in the upcoming electrification era. Though the newly merged company will have more brands than the German giant they are still severely behind in the electric vehicle market. PSA and Fiat Chrysler plan on developing a “super platform” which will hopefully complete with Volkswagen’s electric lineup, but obviously it’s not in production yet. While PSA and Fiat Chrysler are behind the curve when compared to Volkswagen, and Toyota too for that matter, it’s still not too late to enter the electric vehicle market.
This merger clearly where the automotive industry is heading, if nothing else. Car brands all over the market are pouring truckloads full of cash in EV development, and the trend doesn’t seem to be slowing down anytime as brands announce all-electric plans for the future. Other mergers could come soon as other car brands seek ways to efficiently develop electric vehicles.
Only time will tell if this merger proves to be profitable, but it’s definitely best for the auto industry if this new company gets on alright. With so many brands under its control the industry would be sorely hurt should Fiat Chrysler and PSA have to lose any or all of them.