A U.S. investor backed by Silicon Valley venture-capital firms is planning to build a novel new car in Italy that, if successful, would help reverse a trend that has seen auto manufacturing move out of the recession-stricken country.
LCV Capital Management of Pittsburgh announced in Rome that it plans to reopen a long-defunct auto plant in Italy's far south to produce a small, superlight car, made of polypropylene and glass fibre, that would sell for just over $14,000 (U.S).
LCV and its backers – among them Google Ventures and Silicon Valley venture capital firm Kleiner Perkins – have already invested $89-million in the car's research and development, said LCV managing director Tony Bonidy. Google Ventures is the venture capital arm of Google Inc., which is developing a self-driving car.
He said bringing the car into production would cost about $132-million on top of the R&D expense.
"We're coming at a time when Fiat is moving [production] out of Italy," Mr. Bonidy said. "There's a skill set available here. There's a willingness and drive to make cars here."
The prototype of the car, which does not have a commercial name yet, exists in the United States. But the project seems risky. The funding to produce the car is not in place – LCV hopes to get some financial assistance from the regional and national governments in Italy. LCV has no experience in building cars and, as the Italian press has pointed out, there is no shortage of well-regarded cars in Europe that sell at a price similar to the one proposed by LCV for its car. They include the Fiat 500 and the Fiat Panda, which are the top-selling small cars in Italy and among the top sellers in Europe.
Mr. Bonidy, who has had careers at IBM, NeXT Computer and supply-chain software company CombineNet, said the composite material to be used in the four-door car would make it about 40 per cent lighter than a steel car of similar size. Production costs would be 70 per cent lower than those of a traditional steel car because no metal-stamping, welding and painting machines would be required on the assembly line, he said. Reviving an old plant would also save costs.
The car would be powered by an Italian-built diesel engine – there are no plans for an electric version – though the supplier has yet to be chosen. As a marketing ploy, customers would be able to pick any colour or image and have it injected onto the skin of the car.
Mr. Bonidy said the making a car in Europe is attractive because the euro is weak against the dollar. A glut of manufacturing capacity, he added, makes Italy an attractive place to produce the car cheaply. The goal is an initial production rate of 20,000 cars, starting in late 2016.
Italian car-making is dominated by Fiat, which is part of Fiat Chrysler Automobiles (FCA). Led by Italian-Canadian CEO Sergio Marchionne, FCA has been quietly downgrading its Italian business. The company is now listed on the New York Stock Exchange, with a secondary listing in Milan. Ferrari, which is owned by FCA, will soon be spun off and listed in New York too.
FCA's signature Italian car, the 500, is not made in Italy. Although FCA is reporting rising Fiat and Chrysler sales, Mr. Marchionne recently said another round of consolidation is inevitable because of the enormous costs of developing new cars. Recently, he has been meeting auto companies, including electric car maker Tesla, to float his consolidation ideas.