How about a plug-in Jeep Grand Cherokee? Fiat Chrysler Automobiles' Chief Executive Sergio Marchionne is thinking about it.

For years, the auto maker has owned the market for large SUVs and trucks, but now it is facing a quandary: the popularity of these vehicles is dragging down its fuel economy standing with regulators. Now, Fiat Chrysler has to make some significant improvements on this front or risk falling out of compliance with toughening emission regulations.

The effort could entail an aluminum body for a forthcoming Jeep Wagoneer, a full-size SUV that will top the brand's lineup, as well as liberal use of aluminum on the next-generation Jeep Wrangler due out in 2017, Mr. Marchionne said Tuesday night, speaking to reporters in Detroit. The CEO is also considering an electric motor for the Grand Cherokee and plans to make the new Town & Country minivan a plug-in electric vehicle.

"If you look at the way we get evaluated from an emissions standpoint, [plug-ins] are most beneficial to the fleet," Mr. Marchionne said. "Electrification is coming, whether you like it or not."

Like other auto makers, Fiat Chrysler will have to shell out billions over the next decade to develop the next-generation of fuel-efficient cars. Federal fuel economy regulations are set to rise sharply through 2025, forcing companies to explore pricey, new technologies such as battery power and lighter-weight materials like aluminum and carbon fiber.

Fiat Chrysler has the added challenge of having to play catch up with many of its rivals. With its sales heavily tilted toward large SUVs and trucks, the car maker's average corporate fuel economy rating is at the bottom of the pack, according to the Environmental Protection Agency's rankings.

The iconic Jeep Wrangler is among the models in need of the most intervention. Shaped like a box, the aerodynamics are poor and its 21 mpg highway rating is still far from where it needs to be in 2025.

The Wrangler's body will remain steel for the next generation, Mr. Marchionne said. The company had considered building the body out of aluminum-- similar to what Ford Motor Co. has done with its new truck--but decided it was too costly. Instead, the new Wrangler will use aluminum on many other parts.

"We've run the numbers and we've simulated the mileage," he said. "But because of the difference in costs, not just in materials but the actual assembly process, I think we can do almost as well without aluminum."

Mr. Marchionne added: "This is untrue of the Wagoneer." Fiat Chrysler plans to revive the Grand Wagoneer in 2018, adding a top-of-the-line model that will be Jeep's largest and most expensive. He declined to provide details, but given its size, it will likely need a lighter body to meet fuel-economy standards.

For now, though, the company has to smooth out its own launch problems. The rollout of the new subcompact Jeep Renegade has hit a snag with the car maker, delaying shipment of models to fix a problem.

When asked about the delay, Mr. Marchionne replied "welcome to software," suggesting the Renegade is having transmission problems similar to the ones the Jeep Cherokee initially had when it launched two years ago. "It's a combination of attributes that is making my life horrible," the plainspoken CEO said.

Mr. Marchionne, also during a speech that evening, also disclosed he was having a "bad engineering day" but declined to elaborate on what exactly was causing the headaches.

The arrival of a new Grand Cherokee SUV in 2017 is also running behind schedule because engineers are trying to develop shared parts that can also be used on the Grand Wagoneer, he said.

A decision on where to build the new Jeep Wrangler is also dragging on. Mr. Marchionne said it has now come down to two options: Toledo, where the current Wrangler is built, and another location. Mr. Marchionne declined to comment on whether the second option is in Michigan.

Write to Christina Rogers at christina.rogers@wsj.com

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