Fiat dismantles Chrysler’s electric car plans

Controlling shareholder Fiat S.p.A. decides to scrap the Chrysler Group’s electric car program in favor of a more traditional organization. This turnaround plan has already disbanded a team of engineers dedicated to produce a range of electric vehicles to showrooms.

Moreover, sales targets for battery-powered cars set have been dropped as the carmaker was deemed to be sliding toward bankruptcy and seeking government aid. The electric car program was used by Chrysler to get the $12.5 billion federal aid package. Last August, Chrysler even took $70 million in grants from the U.S. Department of Energy to develop a test fleet of 220 hybrid pickup trucks and minivans.

Unfortunately, these vehicles are now scrapped after Fiat CEO Sergio Marchionne announced this development. Last Friday, Chrysler spokesman Nick Cappa confirmed that its in-house team of electric car development engineers had been disbanded. Cerberus Capital Management, the automaker’s former owner, had set up a special division called “Envi” — derived from Environment — to lead the development of hybrid technology.

In an interview with Reuters, Cappa said that Envi is “absorbed into the normal vehicle development program.” This major reversal does come as a surprise in light of the recent actions taken by the carmaker. In September 2008, Chrysler had announced that it was developing three electric vehicles and would be selling the first of the models by 2010. Chrysler made the move because it faced increasing pressure to raise the fuel-efficiency of its cars. Last January at the Detroit auto show, Chrysler pledged to have 500,000 battery-powered vehicles on the road by 2013, including sports cars and trucks.