Despite promises to fast-track development of three electric car models using federal loan dollars to prevent its bankruptcy, Chrysler announced yesterday that it will instead disband the engineering team responsible for the projects.
For decades Chrysler has relied on selling gas hogs like trucks and minivans to turn a profit. As the producer of five out of the top 10 most polluting, inefficient passenger vehicles in America, Chrysler has not surprisingly seen its sales plummet by half in the last few years of volatile gas prices. So the plans to become a leader in the electric vehicles market introduced under pre-bailout CEO Bob Nardelli seemed like a welcome change of direction for this old industrial giant.
However, Chrysler’s new CEO Sergio Marchionne, who took leadership of the company after the government-brokered merger with Fiat, is himself personally skeptical of electric vehicles, stating that E.V.’s will only account for one to two percent of overall production by 2015 – a mere 60,000 vehicles.
The announcement that Chrysler’s electric vehicle program, ENVI, would be scrapped came amidst optimistic projections in the company’s brand new 5-year plan. “Some of you have [assumed] that we are losing money,” said Marchionne, “this is not true.” The 5-year plan promises repayment of the $12.5 billion bailout money by 2015, resting these projections on questionable assumptions that the company would double its sales by 2014, and grow revenue by 20% each year for the next five years. “Today is the first day of the new Chrysler.”
Unfortunately, the “new Chrysler” is going to be one that produces about half a million fewer electric vehicles by 2014 than it promised in its application for the $12.5 billion federal bailout it received from taxpayers. Not only will this slow the growth of electric and plug-in hybrid vehicles on US roads, it will also have negative supply-chain effects on suppliers of critical components, such as battery manufacturer A123.
These are the technologies that Chrysler promised American taxpayers when it sent its CEO to Washington begging for money to avoid its collapse. To renege from the agreement is unethical at best and downright dubious at worst. As recently as August, Chrysler received $70 million more in federal funds from DOE to support the development of a fleet of 220 test vehicles, which has now been scrapped.
Meanwhile, virtually every other major US automaker is putting a serious down payment on commercializing an electric drive or hybrid vehicle – from small start ups like Tesla, Fiskar, and Coda to giant mega brands like Honda, GM, and Toyota. GM plans to have the first U.S. plug-in hybrid electric vehicle, the Volt, on the market next year. GM estimates that it could get 203 miles per gallon.
Maybe Chrysler’s departure from electric vehicles is a sign of an early industry “shake out,” where companies without a competitive advantage tip their hat and exit the market when they foresee an inability to compete. But with more efficient fuel economy standards to contend it seems unwise for a company struggling to define its future to be turning its back on electric drive technology.
– Sean Pool
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As part owners of Chrysler via the government bailout funds, I think it’s time we demand our money back. I was personally very interested in these plans. As someone with two kids and a third on the way (and family that visits for extended stays), a minivan is hard to do without. And while my Sienna gets decent gas mileage for a minivan, I was seriously hoping my next van would be hybrid or preferably plug-in. I’ve never been a fan of Chrysler products, but an electric or plug-in hybrid minivan would have caused me to reconsider. Considering this was the backdrop provided in their plans for bailout funds, I think there’s clear grounds now to declare them in default of the bailout deal and the government should bring down the hammer.
Say goodbye Chrysler. As soon as the economy starts to recover, oil prices are going through the roof. When gas reaches $10 gal, even I can plug a car in each night.
The market penetration of electric cars will be surprisingly quick once critical thresholds are reached.
Buy lithium, we are going to be short.
Then again the US economy might be permanently stuffed.
There is an incredible surplus of car production capacity in the world; Chrysler should have gone bankrupt before we bailed them out. It turns out to have been a terrible mistake to bail out Chrysler but we need now to get our money back. They are going to fail regardless of Fiat– how can they compete against all the better Asian manufacturers?
I am continually perplexed that the public does not put 2 & 2 together and realize that if we would significantly reduce the amount of fuel that we consume we have a very good hammer to keep the fuel prices in check for the areas that we will be depending on fossils for years to come. For the environment that also means that the oil industry will be less motivated to exploit more costly remote locations. The Arctic for instance. Perhaps we could even leave a few gallons in the ground for future generations, should we make it thru the present era. Oh, guess what, it is good for the carbon stomp of the present as well.
Does the DOJ have some sort of breach of contract claim against Chrysler? This is appalling.
“CEO Sergio Marchionne [...] is himself personally skeptical of electric vehicles.”
I am guessing he was equally skeptical of hybrids (and maybe he still is?). I know that my next car, and any other car I buy for the rest of my life, will have a plug. If Chrysler follows this path, it will be back in Washington asking for more money, and I will be organizing opposition to any such funding. Forget attaching strings – attach chains to the next bailout package.
My grandfather was an engineer and manager at Chrysler in the design department back during the 1930s. He was also one of the two men responsible for the design of the Chrysler AirFlow. One of the first aerodynamic production automobiles. He is now spinning in his grave over what use to be a dynamic and innovative company that was often ahead of the curve.
I’ve personally spent more than 20 years working for and with Italian corporations. Stereotypically they are geniuses of design, but lack well thought out marketing and execution. I dearly love the people, but I can almost guarantee that you are witnessing the demise of Chrysler.
Remember folks – FIAT owns Chrysler now, and Chrysler can be a gate way for them to bring their small, fuel efficient cars to the US market from Eurpoe. EV’s, while a necessity in meeting the global climate crisis, are direct competition for those cars, and so Chrysler is making a rational internal marketing decision.
The hell with bailing out the Corporations and BIG money, it is past time to look out for the people of America and the world. Pass a meaningful sustainable energy bill !!! Or get off the bus…
Chrysler damaged it’s shareholders and shafted it’s secured bond holders. Now they are not keeping promises on alternative energy powered cars. Chrysler also fired dealers it needed very badly. With a shriveled dealer network, rolling out an electric car is more difficult. It looks bad for Chrysler.
RIP Chrysler…
You are too generious Brewster, my feelings come closer to- ROT in hell.
David Ritson Says:
November 10th, 2009 at 5:48 pm
The question posed by his post should be how best to provide vehicles that minimize total CO2 emissions arising from both the power production sector and direct vehicle emissions. Using the numbers contained in the NRDC-EPRI 2007 report a simple exercise shows that total emissions are best minimized by using additional power sources, in combination with Hybrid vehicles, to phase out coal plant generation, rather than using the power to fuel an equivalent fleet of Electric vehicles. Too often, as apparently assumed in this post, the comparison made is to an equivalent conventional vehicle fleet plus an unchanged power production sector. What is needed, and hopefully Fiat Chrysler are aiming to provide are highly efficient, inexpensive compacts that will minimize net CO2 emissions and provide high mpg performance simultaneous with the replacement of coal generation by renewable power production. The EU has already gone far to meet these objectives.
“…to phase out coal plant generation, rather than using the power to fuel an equivalent fleet of Electric vehicles”
I’m just not seeing why this is an either-or choice. We should, no must, do both.
It was a very BIG MISTAKE to bailout Crysler.
It should be NATIONALIZED, like GM. Then the governmet could plan the re-estructuration of the company , and make a Four Year’s Plan to obtain 10% electric vehicles, other 20% hybrids, and duplicate the fuel efficiency of the rest. In 15 years, all Crysler cars should be electric or hybrid.
By 2030, the fossil fuel powered cars should be found only in the Museums of History.
It’s time to get the money back to the People, then nationalize Crysler, and after re-estrucuration, return the company(re-privatize) to the workers as a co-operative.
R.I.P. the Big-Capital Crysler!
Long live the New Socialized Car Industry!
Capitalists are Capitalists. American, European, Asian, all the same money-avid people.
Only an alliance between industrial workers and conscious State funcionaries guided by tecnics plus a total transparency that would permit the People to control the progress of reforms.
(i.e. not oligarchic bureocrats, like in the so-called “Union of “Soviet” “Socialist” Republics” or in the so-called “People’s” Republic of China).
Yes we can. We can transform the world economic system. There are needed clear ideas, plus clear arguments to shut-up the Big-Capital funded conservatives.
Let us hope that is not needed a CAT-6 hurricane hitting New York or Washington D.C., or a drought-induced collapse of US agricultural production.
Maybe a second wave of financial-economic collapse(like in 1931-1932), specially if triggered by a second oil shock with oil at 130$ a barrel, will be sufficient to wake up the people.
Why not nuclear power plants no pollution there?? Chrysler was a bad investment along with GM. The money in these companies will never be payed back like putting money into a black hole. Why should we be so concerned about other countries,this is the USA. The internal combustion engine will be around for years to come. GMS 200 mile to the gallon is a fantasy at most, if they have the technology why is it not in production??? In Sacramento all homes and businesses are getting what is called smart electric meters and also plug ins for green cars and also to moniter your heating thermostat so you can see where this is going, almost forgot a grant for $175 million to do this. Our tax money hard at work, ah I think it is. Socialism is here.
Re my previous Message 13, Message 14 from BBY says “why not do both”, namely phase-out of coal burning plants and build EVs. Unfortunately it is a zero sum game. New renewable electricity production for at least the next decade(s) will be very limited. Therefore choose uses that will most effectively minimize CO2 emissions. Phase-out of coal plants is a clear winner both in this respect, and the obvious, namely EVs are a niche toy for the wealthy.
Bob, the “200 miles for gallon is an utopia” is exactly the thought that discorauges action. If soldiers go to the front believing victory is impossible, the defeat is 100% assured.
We just must change method. Bailouting Car companies without re-estucturing them before is like trowing money in a black hole, just as you say. The Big-Capital executives simply will burn the money mantaining the statu-quo and producing in the same way they every do. Then they will demand more money, your money(it’s not mine , I’m Latin American, not an US citizen).So they will grow, as will do the banks, bevaving like black holes: the more they absdorb, the more they demand.
That until the State, already with a deficit equal to 10% of GDP, will itself fall in banrupcy, China will sell all the Treasury papers to buy gold from Latin American and finally the once World Superpower will be like a Third World Country, like mine. That’s like black holes work. North America will be a Supermassive Black Hole.
So transform those Black Holes into White Holes(or Naked Singularities, if you like). Black Holes can be opened into wormholes by something called “exotic matter”(is a General Relativistic term referring to something like “negative energy matter”, with repulsive properties instead of attractive ones as ordinary matter).
The “economic exotic matter” is called SOCIALISM. Is exotic, probably the most exotic thing in the US. But by a nationalization, that will permit a re-organization, the basis for zero carbon economy can be built. Then, “privatize” them not to Big Capital, but to the workers of the plants, engineers and every one that works hard to mantain alive such companies.
The new directives, toward the ZERO carbon economy, should be like the “Constitution” of the company, modifiably only by a very large consensus of the all the members of the new co-operatives.
Utopic? At present state of the economy, the failures that causes the 2008-2009 collapse are still there. After a (likely) second wave of collapse, that may be the only option to save North America from becoming a Supermassive Economic Black Hole.
We can transform the Economic Black Hole in a Wormhole to the future, a Bright Green Path to the future.
ZERO gallons per kilometer.
YES WE CAN.