Wednesday, September 24, 2008

Chrysler leaps into electric vehicle race

Behind thrill is risk over U.S. loans, battery


Chrysler LLC looked like its old, scrappy self Tuesday in announcing ambitious plans to develop a full lineup of electric-drive vehicles, one of which it says will be ready for sale by the end of 2010.

The move immediately and surprisingly puts Chrysler in the race to develop an electric car along with General Motors Corp. and others by 2010 and gives the Auburn Hills automaker something exciting to talk about after a year of dramatically scaling back its business.

The announcement also comes as Chrysler, GM and Ford Motor Co. are lobbying the U.S. government for at least $25 billion in loans to help retool so they can make more fuel-efficient vehicles.

Unlike GM's Chevrolet Volt, Chrysler is working on range-extended electric vehicles based on current models -- the four-door Jeep Wrangler and the Chrysler Town & Country minivan.

In addition, Chrysler is proposing an all-electric Dodge sports car based on the underpinnings of a Lotus that would run 150 to 200 miles on a fully charged battery.

"This shows that our commitment is not to public relations but to actually advancing technology, putting it in the hands of customers in an affordable manner. That's probably why you may be surprised how quickly we got to this point," Jim Press, a Chrysler president and vice chairman, told reporters Tuesday. "These are vehicles that are being engineered to move from the laboratory into the street."

The announcement was greeted in Detroit by surprise and praise but also skepticism and cautions that -- as with GM's effort -- future electric vehicles depend on the development of unproven lithium-ion battery technology.

"That's really aggressive," said Erich Merkle, an industry analyst with Crowe Chizek and Co. "It's really going to come down to: Is the battery technology there? Is it ready? And can you scale it?"

Chrysler Chief Executive Officer Bob Nardelli said Tuesday's unveiling was intended to give a glimpse at the automaker's near future and demonstrate how serious Chrysler is about bringing electric vehicles to customers.

"We're developing a full portfolio. ... I think that's what's uniquely different about today's announcement," he said. "We're not talking about a car -- we're talking about a full line."

Nardelli and other auto execs have been in Washington to lobby lawmakers for loans that were promised last year as part of legislation to increase fuel-efficiency standards.

"It's crucial that our government works with us -- with the American companies -- to develop this technology, not only in making sure they approve the funding, but the laws and regulations allow us to have access to that funding, specifically for advance technology and innovation," Nardelli said.

Asked how the electric program would be affected if Congress refused to issue loans, Nardelli said: "Then we'll have to face the tough decision. We will, and all of us -- all of the U.S. manufacturers -- are going to have to make some very tough trade-offs because it is not optional relative to continuing environmentally friendly, energy-independent vehicles for our customers here in this country."

When Chrysler hinted at future electric cars during the Detroit auto show last January, many analysts were skeptical.

Some Chrysler dealers even quietly complained to the Free Press about their concerns that Chrysler wasn't moving quickly enough into electric vehicles, especially as GM generated glowing media coverage for its Volt, a car unveiled in 2007 and planned for sale in late 2010.

On Tuesday, Chrysler showed its independent dealers from across the country video footage of the electric-drive cars and other future vehicles.

"I think there are a lot of guys breathing a big sigh of relief today," said Jim Arrigo, owner of a dealership in West Palm Beach, Fla., and cochairman of Chrysler's dealer council.

Chrysler's sales are down more than 20% this year and the automaker has been undergoing changes on all fronts since going private last year.

The company is shedding more than 28,000 jobs, has cut four models and taken out 1.1 million units of production. Even Chrysler's halo, the Dodge Viper sports car program, is up for sale.

But with Tuesday's announcement, Chrysler appears to be trying to create a new buzz with the all-electric Dodge sports car. The two-seater, which has yet to be named, is going to be fast: The company says it will go from zero to 60 miles per hour in less than five seconds.

It's also quiet. Riding inside the tight cockpit is like jetting down the road in a supercharged golf cart. Tom LaSorda, a Chrysler president and vice chairman, said Chrysler is partnering with Lotus on the sports car.

The vehicle would plug into a typical 110-volt or 120-volt electric outlet and its lithium-ion batteries would be recharged within six to eights hours, Chrysler said. A 220-volt or 240-volt outlet could be used to cut the charging time in half.

"We will have partnerships on the batteries," said Frank Klegon, Chrysler executive vice president for product development. "We're working with more than one potential supplier on the battery side now."

LaSorda confirmed that Chrysler is in talks with A123 Systems Inc., a potential supplier to GM's Volt project, along with other battery makers.

Chrysler's two range-extended vehicles, which are in the same vein of development as GM's Volt, would run on electricity, too, but would each have a backup, gas-burning engine to generate electricity when the battery charge runs out.

Klegon said both the Jeep and minivan range-extended vehicles would be able to drive 40 miles on a single battery charge before the generator kicks in, giving the vehicles 400 miles of total range.

Chrysler executives said that one of the three vehicles would go on sale by the end of 2010 in North America and shortly after that in Europe, but they declined to say which one or what the prices might be.

Aaron Bragman, an industry analyst with Global Insight, was impressed, especially with the proposed minivan, calling it brilliant.

"It presents an interesting case for families, people who are looking for budget-conscious transportation that want to eliminate their fuel bill or drop it significantly," Bragman said. "It's the kind of thing we expected from Chrysler in previous years that they haven't shown much of recently, which is basically zigging when everyone else zags."

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