Fiat’s Chrysler Unplugs Its Electric Car Plans

The move by Fiat SpA marks a major reversal for Chrysler, which had used its electric car program as part of the case for a $12.5 billion federal aid package.

Chrysler spokesman Nick Cappa said on Friday that an in-house team of electric car development engineers had been disbanded in favor of a more traditional organization.

The automaker’s former owner, Cerberus Capital Management, had set up a special division called "Envi" , derived from Environment, to spearhead development of hybrid technology where Chrysler badly trailed competitors. Envi is absorbed into the normal vehicle development program.

Under mounting pressure to improve the fuel-efficiency of its line-up, Chrysler announced in September last year that it was developing three electric vehicles and would sell the first of the models by 2010.

In January at the Detroit Auto Show, Chrysler upped the ante on its electric car bet by pledging to have 500,000 battery-powered vehicles on the road by 2013, including sports cars and trucks.

But a presentation of Chrysler’s five-year strategy by Marchionne on Wednesday made no mention of Chrysler’s earlier electric car development plans.

Under the Marchionne plan, former Envi chief Lou Rhodes will become the group line executive in charge of electric car development for both Fiat and Chrysler, Cappa said.

The Obama administration, which has set a target of putting 1 million electric cars on the road by 2015, gave Fiat a 20 percent stake in Chrysler in exchange for bringing vehicles and more fuel-efficient engines to Chrysler.