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Chrysler pulls request for U.S. loan for hybrid and electric cars

By Brent Snavely, Detroit Free Press –

DETROIT — Chrysler says it will no longer seek a U.S. Department of Energy loan to fund the development of gas-electric hybrids and electric vehicles.

“The Department of Energy’s proposed terms were very restrictive and compliance would have negatively affected our operational flexibility,” Chrysler said Thursday in a statement.

Chrysler CEO Sergio Marchionne said last April the company needed the loan to be competitive.

Chrysler initially applied for more than $7 billion in 2008 under the DOE’s Advanced Technology Vehicle Manufacturing program, but later reduced the request to less than $3.5 billion.

Chrysler also said it can develop competitive, fuel-efficient vehicles without the federal loan.

“While we were continuing to work with Chrysler to come to an agreement, we are pleased that they are capable of achieving their business goals without department support,” said Damien LaVera, a DOE spokesman.

The $25 billion loan program was funded by Congress during President George W. Bush’s administration. There is still $16 billion available, LaVera said.

The Energy Department has awarded $9.1 billion in loans under the program to several automakers, including $5.9 billion to Ford, $1.4 billion to Nissan and $529 million to Fisker Automotive, a manufacturer of electric cars.

General Motors withdrew its application in January 2011.

Chrysler plans to launch a battery-powered Fiat 500 this year.

Last month, at the North American International Auto Show, Marchionne expressed frustration about the lengthy process, smaller loan amount and restrictive terms.

Republican presidential candidates — including Mitt Romney — and congressmen have criticized the Obama administration for providing emergency loans to Chrysler and GM in 2009.

Last May, Chrysler repaid all the loans received from the Obama administration and the Canadian government.

At the same time Fiat, which owns 58.5 percent of Chrysler, bought the U.S. government’s equity stake in Chrysler.

The only U.S. aid Chrysler has not repaid is what it received from the Bush administration.

Chrysler also earned $183 million in 2011, its first profitable year since 2005.

“The company is in much better financial health than it was in 2009 and to me appears to be a perfect candidate for a 136 loan from the DOE,” U.S. Rep. John Dingell, D-Mich., said in a statement.

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