Chrysler: Taking Taxpayer Money and Running Away From Cleaner Cars

chrysler_chart.png(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.

fiat_chart.png(Chart: Chrysler)

  • Travis

    This article is not only misleading it is wrong. The vehicle does not have to be electric to be clean and efficient. They abandoned the program to go with a more viable option. Hybrid electric cars are a nitch market. Chrysler isnt interested in selling to .02% of the buying population. They want to sell to the majority. Chrysler already has ULEV vehicles on the road. And with fiat technology (some of the best diesel technology in the world) they will have clean fuel effecient AFFORDABLE vehicles. If you think you Diesel, what does that have to do with clean cars? Look at the VW TDI Jetta as an example it is Ultra Low Emmission Clean Diesel that gets better fuel economy, power, and style than the Prius. Fiat is also going to utilize forced induction technology that will make better power without losing fuel economy.

    So before you say they took the money and run realize they ditched the electric pipe dream and went with a REAL viable option.

  • Cindy Posey

    So the NY Times said that Lachlan Seward runs the DOE car money and that he worked with and for Chrysler in their last bailout and that he isn’t giving out the car money.. except to Chrysler, his buddies.. Looking for a private sector job it looks like.

  • pgcooldad

    Wrong, wrong, wrong.

    The current owners of Chrysler were not the ones who “trotted-out alt power vehicles to secure some $12.5 billion (plus) in federal bailout bucks” That dubious distinction belongs to Cerberus, who got the boot when the government sought Fiat as a partner.

    Below one can clearly see that the government courted Chrysler’s current owners/managers, Fiat, for the tie-up.

    We did not believe we could underwrite its viability without a strong corporate partner, so we turned our attention to that single possibility, an overture from Fiat.

    After about an hour, the President asked for any final comments and then said, “I’ve decided. I’m prepared to support Chrysler if we can get the Fiat alliance done on terms that make sense to us.” And we were thrilled when the President said, “I want you to be tough, and I want you to be commercial.”

    http://money.cnn.com/2009/10/21/autos/auto_bailout_rattner.fortune/index.htm?postversion=2009102104

    Fiat never ever promised any electric, hybrid, or alike vehicles and the government knew about it.

    Fiat also brought its advanced products to the table — small, stylish cars and fuel-sipping engines, Rattner wrote.

    If anything, the taxpayers should be happy to see a management team at Chrysler telling the truth and not pumping a profit-killing program that will not help it pay the government back. They need to concentrate on the core and if feasible work on the fluff.
    The current Corporation is NOT the old “Cerberus Owned” one.
    The current corporation is a 20% Fiat Owned and Managed Company.
    The current corporation never lied to congress.

  • Doug

    I’m happy that the comments are at least telling the truth since the media is still clueless.

    I’d rather buy a 40+ mpg Chrysler badged Fiat for $25K instead of a $40K Chevy Volt. We’ll see who sells more.

  • Trust me, I’m from Chrysler

    Why would anyone buy a Chrysler? They cheated their bondholders,cheated their dealers and cheated their suppliers. They protected the union and management that caused the bankruptcy. The next time they go bankrupt they will have the opportunity to cheat their cukstomers out of their warranty. World famous for the worst vehicle quality they will not last two years. That is why Fiat did not put any money in the business.

  • This is not at all surprising. They don’t care about the environment. They just want money.

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