Chrysler: Taking Taxpayer Money and Running Away From Cleaner Cars

(Chart: Chrysler Restructuring Plan)

When Chrysler asked the government for a second round of bailout money in February, it submitted a 177-page restructuring plan that vowed to usher in a new era of fuel-efficient vehicles at the famously gas-chugging automaker.

The chart above, taken from that restructuring plan, shows six models of electric and hybrid cars labeled "ENVI," the name of the company's cleaner-car unit. Chrysler told the White House it would apply "electric-drive technology ... across all three brands (Chrysler, Dodge and Jeep)," and touted its goal of putting 500,000 cleaner vehicles on the road by 2013. Some environmentalists invoked the news to suggest Chrysler should receive more taxpayer aid.

The Obama administration ultimately rejected Chrysler's plan as too weak, setting the stage for a bankruptcy filing and a new marriage with Fiat. But the government still holds a 10 percent stake in Chrysler and has little chance of recouping its billion-dollar bailout of the automaker -- which makes the company's decision to disband its "ENVI" unit all the more alarming to fuel-efficiency advocates.

"It's certainly a bad sign for Chrysler that they emerge from bankruptcy and immediately shift into reverse on
clean cars," Dan Becker, founder of the Safe Climate Campaign, said in an interview. "It doesn't bode well for their future, and it's a terrible way to thank the American people for investing billions of dollars in their future."

Chrysler's about-face on cleaner cars was first reported by Reuters, which noted that Fiat chief Sergio Marchionne was knocking down Chrysler's 2013 cleaner-vehicles projections from 500,000 to 60,000. A company spokesman noted that electric vehicle development was not canceled outright but "absorbed into the normal vehicle development program."

Still, Chrysler's restructuring plan was not the only rosy prediction turned on its head. The company received $70 million in Department of Energy (DoE) grants in August to produce hybrid pickup trucks and minivans, only to cancel that project this month.

"It's a sign of Chrysler being tremendously out of touch with where the market is going," Lena Pons, transportation policy analyst at Public Citizen, said in an interview. "They're going to find it difficult to compete without having at least the engineering capacity [to produce EVs]."

Given that the bailout money is already out the door, the Obama administration has little or no recourse to hold Chrysler to its early vow. But the taxpayers who helped rescue the company are still free to register their disappointment.

Late Update: Below is a copy of Chrysler's new cleaner-cars plan, which replaces the initial plan for 10 low-emissions vehicles with two, one a Dodge and one an unnamed Fiat vehicle. The DoE grants are still depicted -- now going towards the hybrid Ram, which is expected to get 30 percent better fuel economy than the current version, or just shy of 20 miles per gallon.

(Chart: Chrysler)