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FCA to bet $9B on electrification, double operating profit by 2022

As part of its five-year strategy through 2022, Fiat Chrysler Automobiles NV said it will invest €9 billion on electrification as it seeks to double operating profit by 2022 and that it plans to launch a financial services company in the U.S.

FCA expects adjusted EBIT to double in 2017-2022, with adjusted EPS projected to nearly triple over the period. The company also disclosed a plan to achieve €10 billion of cost efficiencies during the period through efficiencies in manufacturing and purchasing.

The automaker is targeting a dividend payout ratio of approximately 20% of annual net profit throughout the period.

Speaking at the company's Capital Markets Day in Balocco, Italy, CEO Sergio Marchionne said the company is set to report a net industrial cash position by June-end, which is expected to grow to €19 billion to €21 billion by 2022. The company's net debt totaled €10.55 billion at the end of 2013.

FCA also disclosed plans to launch a financial services company in the U.S., either through an acquisition or by building it from scratch.

The company announced partnerships with Alphabet Inc. self-driving division Waymo for developing a fully self-driving vehicle for FCA retail customers, and with Bayerische Motoren Werke AG to develop a Level 3 autonomous driving technology for highway application. The company will also partner with auto parts maker Aptiv PLC to create a scalable autonomous driving system and add Level 2+ autonomy to its vehicles by 2020 and achieve Level 3 autonomy by 2021/2022. Level 4 autonomous driving systems are expected to be available to customers around 2023.

The company plans to enter three new segments under Jeep. Under Jeep, FCA plans to make an electric option available across all models by 2021-end, launching 10 plug-in hybrid electric vehicles and four battery electric Jeep vehicles by 2022. In all, FCA will offer 12 electrified propulsion systems across its full range of vehicle segments, with 30 models across FCA's offerings, including Maserati and Alfa Romeo nameplates, featuring one or more of these systems by 2022.

In addition, FCA said it will phase out diesel engines on all passenger cars sold in Europe by 2021, with only light commercial vehicles getting a diesel alternative.

The company will offer two new mobility services in 2019 under Jeep's Wave Loyalty program. One would be a monthly subscription service for FCA vehicles and another service would allow new Jeep Wrangler and Hawk owners to borrow select FCA models.

FCA's share price closed 4.53% lower in Milan and was down 7.77% on NYSE as of 2:22 p.m. ET.