Chrysler’s Electric Vehicles Depend on Government Funds

The sale of Chrysler to FIAT is turning into a battle royale—with diverse and overlapping conflicts between the two auto companies, the Obama Administration, the US Supreme Court and Justice Department, secured and unsecured creditors, consumer groups and three Indiana pensions funds. The Indiana pension funds last week asked the Supreme Court to stop the sale, arguing (among other things) that the US Treasury Department overstepped its legal authority by using bailout funds for Chrysler when Congress intended the money for banks.

Those same bailout funds are also the key to Chrysler’s plans for plug-in hybrids and electric cars. Before sliding into bankruptcy, the old Chrysler had announced it was rapidly moving rapidly into the plug-in vehicle market and showed off three vehicles to make its case—a Dodge EV sports car (now dubbed the Dodge Circuit), a plug-in hybrid minivan and a plug-in hybrid Jeep. At the time, they promised that these vehicles would hit showroom by the end of 2010. The economic meltdown and subsequent bankruptcy threw these plans into doubt.

Uncle Sam to the Rescue

The new Chrysler is back with a new EV plan and—not surprisingly—they want taxpayers to pick up the tab. Chrysler’s ambitious request for $224 million from the Department of Energy will go head-to-head with proposals from General Motors, Tesla and other applicants. The key stimulus program allocated $400 million to support “transportation electrification.” (This is a different pot than the $25 billion in government loans for retooling.) Chrysler was silent on what would happen if its $224 million grant application were not fully funded—except to say that the federal dollars would “reduce the amount of time it will take to get these vehicles on the road.”

Chrysler’s plan, with a total budget of $448 million, is to build a 365-vehicle demonstration fleet of plug-in vehicles: 100 plug-in hybrid Chrysler Town & Country minivans; 100 plug-in hybrid Dodge Ram 1500 pickups;, and—in a clear attempt to win the hearts of federal funders—a fleet of 165 all-electric Town & Country minivans reconfigured for use by the US Postal Service. Chrysler would also use a portion of the money to fund a new tech center in Michigan.


  • Lost Prius to wife

    I know that the car manufactures still need some help, but I am worried that someone will forget to turn off the tap that is going into the car manufacture’s back pocket.

  • otter

    I don’t like any taxpayer money going to private companies. The government should get out of the business of picking winners and losers. Socialism has never worked in history and yet we are going down that path quickly.

  • PW

    What ever happened to good ole capitalism. I you screw up and can’t run your company properly. Then you should fail and go out of business. Most companies the size of the auto companies declare bankruptcy and will probably be back up and running laater. Then there are the people who say what about all those people who will lose their jobs at the auto companies. I’m curious whats going to happen to the millions of people who already lost their jobs in different industries who aren’t going to get a bailout. If the auto companies can’t get together then let them fail.

  • RKRB

    This has all the makings of a scam, even if it is a well-intentioned and unintended one. If these particular vehicles are critical for national security or whatever, then the government should help develop them as part of a trans-corporation plan, rather than loan more billions to one company for one set of vehicles (which may or may not be good enough to succeed).

    In the opinion of some economists, it seems that Chrysler and the current administration have already established a dangerous precedent (which could and should raise the cost of capital borrowing, and which could lower the credibility of capital bond markets) by effectively shutting out traditional bondholders from getting first dibs on assets when a company expires.

    I agree with Lost Prius — these things just seem to go on and on. If you think capitalists are greedy, you should see an upper level government worker trying to defend their turf.

  • David

    In a perfect capitalist world, Chrysler would fail and the good parts would be scooped up at auction – including, presumably, the work done on the EV trio. The new, leaner company would then be able to bring these to market.

  • Samie

    Question I would raise is, Would Chrysler be a viable company after bankruptcy? I would hold reservations in picking Chrysler for the funds due to the company needing time to regain market share and stability. That is why you don’t give them money, instead focus on a more sound company.

    As for comments from Otter & PW above about socialism, will that is a bunch of crap. Private markets and government involvement in those markets have, and always will exist. Get over it! Trying to save GM and Chrysler was important and it goes beyond just those who lose their jobs but affects entire communities and consumer confidence in raising capital through investments in the stock market. Also powering say U.S. Postal trucks via hybrid or EV vehicles is smart and yes requires a massive upfront cost but overtime it pays off and you advance private innovation to make their products better while reducing CO2 and other gasses. Governments role is to spur private innovation and interest by tax credits to consumers to choice new technologies that help us move away from a oil dependent economy, doubt that’s socialism but as long as you can scare someone with that word you gain good political points in the U.S.

  • Joe

    Obama making law, and I thought the President was part of the Executive Branch and not the Legislative Branch!

  • Allan deL

    David made reference to a “perfect capitalist world”. Does such a world really exist? No matter what the present administration does with the mess it inherited, it is wrong and evil in the eyes of many posters.

    It is past time to appreciate the hard work they are doing on our behalf since no one has come up with a better alternative. I own an electric car and it is great, but they are not yet for everyone or every purpose. It is not a question of “either or” but a question of “both and”. The time will come when Petroleum is gone. Those who will live with that had better be ready or it will be tough, really tough.

    And no Joe, Obama is making no law. He is just doing something for a change.

  • Albert

    Gov. has no imagination! Instead of bailing out those dying dinosaurs, why not put those money in future power generations, mass transportation, improved power grids, and bring USA to the next level of industrial revolution? These actions will also solve the unemployment and economy problems. Stop wasting money on outdated companies!

  • Collin Burnell

    Capitalists are greedy! Show me One CEO, CFO or VP of a large company that makes LESS than the President of the United States. The CEO of my local power company made 3.4 million.

    There are those of you who would choose trusting a corporation, who’s sole purpose is profit, over a government (of the people, by the people, for the people) who’s sole purpose is to serve its citizens… No Thank You! Our goverment is not perfect, it never will be. But how many governments have been bailed out of financial disaster by a corporation? None to my knowledge.

    Also, the Billions of dollars given to the Auto Industry, the Banking Industry, etc., etc. are LOANS, LOANS, LOANS.

  • DetroitGuy

    During WW2 the American auto industry shut down all auto manufacturing. The cadillac assembly line rolled out tanks. They made guns and munitions. They converted to manufacturing for the war efforts at a time when we were attacked. What was Toyota and Honda building? Who do you people support?

    I don’t mind helping companies like this out, any time. Our government pisses our money away in a lot worse ways. I’d feel this way even if I wasn’t from Detroit. I’m an appreciative, supportive, and thankful, American. Sometimes you help those that have helped you.

  • RKRB

    Dear Collin:
    Here’s a different view.

    How do you think a corporation can pay its workers and its shareholders (many of whom are pensioners) if they do not make a profit? Have you ever managed a business and needed to pay salaries, taxes, and other expenses?? Corporations make a profit not just by printing money, but by selling reasonable services, as GM and Chrysler are finding out the hard way, and that often helps benefit others.

    Governments are being “bailed out” all the time by corporations, because they are partially financed by corporate tax dollars (which the consumer pays for in increased product costs to pay those taxes).

    Government has a job to do, and they should deserve to be paid enough for it, but the taxpayer (and the Chinese bond-holders who buy US government debt and help finance our government’s lifestyle) pays for it. Of course, those Chinese bondholders now seem justifiably worried that our government could again pull a GM/Chrysler vanishing act and stiff the bondholders (or severely inflate the currency, which would be essentially the same thing).

  • Collin Burnell

    Yea!

    I see your point.

    Wow! What a mess we are in.

    But, we have been in worse shape in the past and pulled through. I am saddened when corporations fail. Not just for the job losses but for the dream losses. On one hand I ‘cherish’ capitalism, on the other, a strong, supportive and caring government. I guess even my own house is divided.

  • Cliff Claven

    I perceive Chrysler as a foreign Co. after finalizing it’s Sell to FIAT!

    Buy American they would Cry…but now most Definitely—would NOT buy there products now new or Used!! Think about the people whom currently own Chrysler products.
    Could they or will they pay higher for parts to repair due to import taxes?

    Reported on national news yesterday:
    That if there is a defective part that could cause or has caused bodily injury, disfigurement and or death. There will be no more massive recalls as in the past to correct it.
    Because all owner’s that operate a dodge trucks, Chrysler autos and or Jeep products no longer have any recourse to stand on, for any type of liability or law suit!!!

    Because Chrysler had been exonerated from any and all liabilities in the bankruptcy process and now is ‘Free and Clear’ of any responsibilities whatsoever to the consumer.