Cosplay Coal Miner Matt Canavan in what I assume is a regular fifteen minutes of hate against wokeness, political correctness, and what Rita Panahi would call "loony lefties losing it", came on 2GB this morning in a rousing display of triumphalism at the thought that FIAT was suspending the production of the 500e because of lefty loonie wokery or some such. To be honest, I have no idea what the jinkies that the anti-woke MAGA knuckle draggers on the right are talking about half of the time; because they've equally been carried off in a wave of nonsense to fight culture wars that I do not care about.
I don't know if Coalboy Canavan likes electric cars because they need coal-fired power stations, or hates them because they don't use petrol. I also don't know whether Cosplay Copper Miner Matt Canavan likes electric cars because they need copper as provided by his opinion provider BHP, or hates them because they use copper from Rio Tinto. I have no way to guess his opinions because depending on whom is paying the bills, he undergoes a Sailor Moon type magical transformation sequence to become whatever his opinion providers demand.
However, the matter of FIAT suspending production of the Fiat 500e has nothing to do with wokery, political correctness, or whatever nutcase invention that these people have come up with. FIAT is a business. Given that the Agnelli family by themselves are probably worth more than the GDP of Australia, I very much doubt that they honestly give a thought to whatever wokery that Cosplay Canavan can come up with.
The real reason, for a business making business decisions is far more transparent. A business making business decisions is because the business of business is business.
MILAN, Oct 1 (Reuters) - Stellantis' (STLAM.MI), opens new tab chief Carlos Tavares will address an Italian parliamentary committee next week on the prospects for the carmaker's production in Italy, the company said on Tuesday, after it warned about poor demand for electric vehicles.
The hearing will take place on Oct. 11, Stellantis said in a statement, after announcing it had extended the suspension of production of its Fiat 500 electric city car until Nov. 1 due to weak orders.
- Reuters, 1st Oct 2024
The reason why FIAT are suspending production of the 500e is ludicrously simple; namely that they can't shift them fast enough and in their rush to extract profits out of the public, they've misjudged what the public can actually pay.
Here’s the basic problem.
https://www.fiat.it/car-configurator/#/
The FIAT 500e costs €29,950, or A$48,824.
Holy cash registers, Batman!
Someone needs to be sat in a chair and have the pointing finger of judgement wagged in from of them. FIAT expects people to pay nearly thirty cussing thousand euros for this? Really? Are they ignorant? Are they oblivious to the real world? Are they mad? Rub my nose in the dirt and call me 'stinky' but even Blind Freddy can see that charging thirty large for this, is madder than Mad Jack McMad who won the 2024 Mister Madman Competition.
This is almost the textbook example of doing market research and then completely ignoring everything that the market research told you. This is yet another example like the Edsel, or the Merkur Sierra, or the Cadillac Cimmaron, where the product itself wasn't and isn't inherently bad but the marketing/sales department have driven headlong into a wall. This is simple economics in action and is repeated elsewhere in the industry.
Suppose that you have the Whizzo chocolate bar on sale in the supermarket. The Whizzo chocolate bar sells for $2. The marketing department tells you that for only a few mils per bar, you can add nuts. You resell you Whizzo Nut chocolate bar for $3, on the basis that you only need to sell two-thirds as many because 3 x $2 = $6 and 2 x $3 = $6. Multiplication is commutative, yeah? You still expect $6 in revenue but have spent less in making the product to get it. The problem is that even with an item which costs $2, people are very much price sensitive and aren't going to just turn around and buy your improved product because of a minor change in benefit to them.
If you then scale this up by a factor of ten-thousand, then selling two-thirds as many big products should scale up? 3 x €20,000 = €60,000 and 2 x €30,000 = €60,000 because Multiplication is commutative, yeah? The maths is perfect; so what's the problem? The problem is that €10,000 is a hell of a problem for the market to absorb. The people whom you hope to sell your improved product to, have not magically had an increase in buying power and are highly unlikely to even be able to buy your thing in the first place. It should be said that €30,000 is not exactly the kind of coin that any cool and funky teenager even has any more. This is not the 1960s, this is not the 1970s, this is not the 1980s.
Just like most of the OECD, wages have generally been on the slide in real terms since about 1980 at the latest. This is mostly because of that strange window in the latter half of the twentieth century where due to two bouts of unpleasantness, the destruction of physical capital was so severe and so massive that for about thirty years, wages growth exceeded the rate of return on capital. What we have seem, and especially after the pandemic, is that not only has capital reasserted itself but we have now reached the point in most countries in the OCED where more than half of all the rewards of GDP are paid as passive incomes to people who have not worked for them. What this means is that the imagined customers who would have maybe bought a FIAT 500 are now convinced that they can double their money by putting it back in their pocket, and the imagined customers who are teenagers or people in their twenties now no longer exist.
FIAT upon having realised that they now have a real life fizzer, aren't going to very well fund a sunk cost fallacy, are they? Consequently, their suspension of production is because of the most open of all business reasons, weak orders.
Now here's what I don't understand. Is this Cosplay Coal Miner Matt Canavan having a triumphant clarion cry because it fits that part of his magical transformation sequence, or this Cosplay Copper Miner Matt Canavan having a whinge because it fits that part of his magical transformation sequence?
Perhaps in a dose of double irony, the ad break which immediately followed had an advert from none other than BHP with their "a-woohoo, a-woohoo, a new generation³" jingle; extolling the virtues of copper mining. This is even more confusing than Cosplay Coal/Copper Miner Matt Canavan's triumph/whinge because I don't know who the advert is for. I'm not going to go out and buy a megaton of copper now. Having said that, if the chocolate bar company wants to sell me a Whizzo for $1, I'll have three of them.
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