Chrysler says no thanks to DOE loan, after yes please to grant

Chrysler Group LLC announced Thursday that it has withdrawn its application for an Advanced Technology Vehicles Manufacturing loan from the DOE

 

Chrysler Group LLC announced Thursday that it has withdrawn its application for an Advanced Technology Vehicles Manufacturing loan from the DOE. US Representative John Dingell (D-Michigan) was disappointed. "I regret that DOE and Chrysler were not able to come to an agreement that clearly would have benefited American workers and manufacturers," he said.

Chrysler is the only one of the Big Three (and one of the few automakers in the world) that has shown little interest in EVs. However, that didn't stop the company from accepting a $48 million DOE grant built into the 2009 Recovery Act to build a test fleet of 140 PHEV Ram pickups, which it never planned to put into production. "Truckers don't want to buy hybrids," said Ram CEO Fred Diaz flatly last February (but apparently Chrysler is happy to build them, as long as it doesn’t have to pay back the money).

Chrysler's decision may have less to do with the company's lack of electrical vision than with the fact that the business environment for automakers has changed. Car companies had a fantastic 2011, and probably now see little need for government loans, with their inevitable conditions. GM also ended up borrowing far less government money than was planned back in the bad old bailout days.

Back in 2009, a bankrupt Chrysler envisioned receiving $6 billion in DOE loans. It has since paid back its US and Canadian bailout loans, and boosted sales and market share, and is now sitting on nearly $11 billion in liquidity, according to the Detroit News. Officials familiar with the matter said that automakers are now able to get financing from commercial banks at better terms than the feds are offering.

 

Image: Chrylser