Fiat pulls the plug on Chrysler's electric car program
Filed under: Company News, Technology, Green
After announcing some impressive plans to develop electric cars earlier this year, Chrysler has provided few details lately, and now we know why: the company has disbanded its crash program to produce vehicles running on electrons. Chrysler has also backed off a bold January 2009 pledge to manufacture 500,000 conventional and plug-in hybrid electric vehicles by 2013. Reuters reported the sad news late Friday in an interview with Fiat CEO Serigo Marchionne.Fiat, reportedly aghast at the horrific condition of its newly acquired U.S. subsidiary, decided to pull the plug on the speculative but exciting effort to add some green to Detroit's also-ran brand. The move is another step in Marchionne's efforts to shake up personnel and organizational structure at Chrysler. Marchionne declared U.S. car sales "a disaster" in September, according to the Daily News in New York.
Chrysler spokespeople have stated that some electric and high-efficiency vehicle development will continue at the company. But it appears that Fiat has ripped the guts out of the core electric vehicle programs, says Edmunds.com's Green Car Advisor blog. Most notably, Chrysler's ENVI group, created in 2007 to build design lines of electric vehicles for all three Chrysler brands, has been broken up.
The Dodge Circuit, a hot-little two seat electric sportster designed to compete with cars from Tesla and Fiskar, has been axed, says Greentech Media. Efforts to make a fleet of over 100 types of electric and hybrid cars have been halted. So what's likely to remain? A few high-efficiency hybrid Fiat models and maybe an electric delivery van for the U.S. market.
Alas, this is only the beginning of what will likely be a bloodbath in the electric vehicles market. Battery maker A123 (AONE) could suffer dearly from the Chrysler pullback. The battery provider had inked a deal with Chrysler in the spring to supply high-capacity batteries for hybrid and electric vehicles. With that deal gone, A123 is likely prowling for new customers to fill the hole. Many other electric car companies, such as Elon Musk's Tesla Motors, have received generous loans or subsidies from the U.S. government as part of a massive stimulus program that doled out $2.4 billion in grants and loans for battery makers alone.
At the same time, the federal government and many states have offered generous tax credits for purchases of hybrid or electric vehicles. The federal credit can eclipse $5,000 for the most efficient cars. Both the stimulus and generous tax credits, however, will likely diminish as both Uncle Sam and the states grapple with ongoing fiscal distress resulting from the severity of the recession and the slow recovery of economic activity.
More broadly, there are at present literally dozens of companies trying to crack the electric vehicle market, including small startups like Tesla, Fiskar, Coda and giant multi-nationals such as Honda Motors (HMC), General Motors (with its Chevy Volt) and Toyota (TM). Even Indian startup Reva has made plans to enter the U.S. electric vehicle market. As the history of any maturing market shows, the chaos of the early days always shakes out. Dozens of companies produced cars in the early days of the automotive industry but only the Big Three (and, to some degree, American Motors) survived the shakeout.
The Fiat decision to scuttle its American subsidiary's electric cars could signal the industry shakeout is already underway. One major problem is the inability of battery makers to bring down prices or increase performance quickly enough to allow the electric roadster to compete on equal footing with the gas slurping status quo. To be fair, Marchionne does plan on making some electric and hybrid cars. But he expects those types of vehicles to total less than three percent of Fiat's total production runs by 2014, a paltry 60,000 or so vehicles. In a nutshell, 440,000 electric cars just died and the toll will likely continue to rise.
Alex Salkever is Senior Writer at AOL Daily Finance covering technology and greentech. Follow him on twitter @alexsalkever, read his articles, or email him at alex@dailyfinance.com.
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Reader Comments (Page 1 of 3)
11-09-2009 @ 12:14PM
John E. Gibbons said...
Chrysler has shown some good sense here. After the subsidies disappear, this movement to electric vehicles will fade or be left to those few companies with sensible and market competive entrants. This industry has gone nuts with Federal and other subsidies and is due for a fall - hope it takes the responsible politicians with it....
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11-09-2009 @ 8:12PM
INdy Steve said...
"Chrysler has shown some good sense here. After the subsidies disappear, this movement to electric vehicles will fade or be left to those few companies with sensible and market competive entrants. This industry has gone nuts with Federal and other subsidies and is due for a fall - hope it takes the responsible politicians with it...."
This link should educate you as to who is showing good sense:
http://news.cnet.com/8301-11128_3-10244414-54.html
11-09-2009 @ 12:16PM
Fred Thomas said...
They still lie and put out junk that will eat up a 50 dollar bill in gas in just a few days.
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11-09-2009 @ 12:59PM
Judy said...
Fiat is in the hands of the arabs, they don't want us to build battery powered cars, so we will keep on guzzling oil at their prices. Wake up people don't buy their dammed cars!
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11-09-2009 @ 2:22PM
Madness said...
Thats right Judy,tell all your friends not to buy Chrysler and put a few more us out of work.While you're at it bring them up to speed on global warming too,you ninny.
11-09-2009 @ 1:03PM
Norman Prevatte said...
Those companies now owned by the government are doomed. They can no longer be innovative, and reallly profitable. They will be gone soon.
Norman Prevatte
Stafford, VA
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11-09-2009 @ 1:07PM
Tech said...
The true sad story of EV-1, GM and the electric car? A long time ago ten miles from GM's Detroit headquarters there was a company that invented the Nickel Hydride battery and guess who they sold it too? GM. This is the battery used in the Toyota Prius today but GM used lead acid batteries in the EV-1 then outsourced the Nickel Hydride to a Korean company who manufactured garbage. GM then sold the rights and technolgy to Chevron/Texaco who have refused to license it to anyone. Toyota somehow got a hold of it and makes these which are a proven technology and much safer than Lithium Ion. Chevron sued Toyota etc. but nothing has come except a lot of legal manuvering while GM lost the initiative and Toyota sold millions of hybrids. Thanks to big oil, Wagoner at GM, the crooked Wall St. boys Detroit died, GM went bankrupt, and Toyota has locked up mining supplies of vital supplies like Lanthanum. Lithium Ion batteries have a big problem-they can easily short our causing an instant reaction across cells and huge fire. The bigger batteries have even more cells and more likelyhood of explosions and fires. With more research maybe we can overcome this stuff but we blew it, or rather the executives sold us out. Detroit is an apocolypse because it was sold out by crooks and so was America. It wasn't the blacks, the unions, or engineers.
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11-09-2009 @ 4:32PM
Coop said...
So, pretty much like when GM bought up all the electric street cars so they could sell diesel buses. . .
11-09-2009 @ 1:13PM
Save America said...
Should this action surprise us???? Just think, Chrysler will go out of business, we americans will have to pay for it thanks to our generous Prez Obama and his liberal czars and congress.
Just wait, Americans will see how well the federal government under Obama's dream for this country will fail in every investment of OUR MONEY THEY HAVE MADE. GOD HELP US!!!!! Obama has set this country up for destruction and the birth of socialism.
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11-09-2009 @ 1:38PM
jj said...
Are you Sure? You could be wrong you know.
11-09-2009 @ 1:38PM
Alex said...
How about nuclear powered cars?
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11-09-2009 @ 1:50PM
MrDoughnut said...
Chrysler Dealers refused to sell the cars like the PT Cruisers for less than MSRP because they thought they could get more. Look who crawling on their hands and knees now?
Why shouldn't Chrysler lose the electric car especially since they would probably try to charge MSRP or more because it is new! Fiat is doing consumers a favor by taking them under control before any more customers get ripped off!
The dealers got greedy now their kissing up to Fiat.
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11-09-2009 @ 2:04PM
Tech said...
I give Chrylser another year tops. With Obama and the "government" running it and GM? How many cars has Obama ever built, repaired, modified, or designed? Glad he and his lawyer crook wife went to Harvard and Yale to learn how to fix cars and will honor warranties!(just drive up to the white house and park on the left) They may sell books about BS but in the real world none of these Harvard smart people know ANYTHING. Ford will survive as they wisely lined up anough money so they wouldn't have to have Obama tell them what to do. Have engineers that know something run things and you'll be a lot better off. Chrylser and Ford were hands on machinists and mechanics who loved cars and machines-they got their hands dirty. These idiots from business schools are morons who make horrible decisions and destroy companies and economies.(and countries) At the top of the heap of crooks and fools are the FED private banksters linked to the globalist Rothchilds. The average homeless guy has more common sense than the executives-they only see short term profits and their stock options going up-then cash out and run. Nuke Wall St., JP Morgan Chase, Goldman Sachs, the FED/IRS scamsters, ban lobbying, bring the troops home or give them air conditioned Caddillacs and Lincolns and have a war with style, to heck with Israel, flush all the graft sucking politicians and make them serve nude!(harder to hide the checks they are taking and you might get better looking crooks!
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11-09-2009 @ 2:05PM
MrDoughnut said...
When dealers start to talk the price of the car up they better check their market share in the industry or they may end up like Chrysler!
A lot of customers must of got tired of these dealers artificially bidding up the car prices which made them think Honda or some other company might be a better deal.
If the dealer gives you the snake eyes just tell them snake eyes you lose!
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11-09-2009 @ 2:14PM
GREG said...
LISTEN UP AMERICA LIKE I SAID IN THE PAST CHRYSLER AND GM WILL FAIL...THE ELECTRIC CAR IS HERE TO STAY AND TESLA AND FISKER WILL RULE ,THE ELECTRIC CAR MARKET ....FORD WILL RULE WITH THERE ELECTRIC CARS AND STILL GET BETTER GAS MILAGE ..I FEEL SORRY IF WE DONT EXCEPT THIS THIS IS THE NEW BEGINING FOR THE USA....DOWN WITH THE OIL COMPANYS THAT MADE SO MUCH MONEY FROM US ...GOD BLESS AMERICA..
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11-09-2009 @ 2:30PM
Richard said...
One fact that hasn't received much attention is that oil reserves, once considered near its peak, is larger than reported earlier.
Several sources, including Scientific American, indicate that oil that was once considered too expensive to extract, now is recoverable due to much better technology and equipment. True, it will still be expensive, but competitively it will be in plentiful supplies for the next 100 years according to SA.
That's with current consumption rates. As more hybrids become availalbe + the increased efficiency of electricity production, i.e. solar, wind and water for residential electicity use, fossil fuel demand by consumers will also drop, thereby creating a possible glut, not a shortage,of oil.
Fiat and other European nations automakers have been dealing with expensive gasoline for scores of years but they have adjusted their transporation needs by developing high speed rail and smaller, more fuel-efficient cars. The Japanese and Chinese both produce cars that routinely get 40+ mpg. But, even if electric powered cars make it to the consumer market it will still be decades before the infrastructure is in place, i.e., battery recharging and swap-out stations which will exchange the drained batteries for recharged ones. That in itself will bolster an entire new industry and job creation.
Gasoline powered vehicles will be the main source of fuel for the world's transportation needs for a long, long time even if it is more expensive.
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11-10-2009 @ 11:14AM
rob said...
how true. Too bad it takes foreigners to do what we use to see as a challange. Where is my handout?
11-09-2009 @ 2:42PM
Madness said...
Anyone who would pay more than msrp for a PT Cruiser has more problems than Chrysler.LOL
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11-09-2009 @ 2:45PM
timothy said...
Any news about/from Chrysler seems to be BAD news. I expect a fresh bankruptcy as soon as next year when Chrysler sales do NOT recover from current levels as Ford , GM and Toyota do. There will be no 3rd bailout!!!!
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11-09-2009 @ 2:48PM
ins0mnia24 said...
Little do you people know..
GM builds the Tesla cars and the Roadster for Tesla...
No b.s..
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