Chrysler Group LLC withdrew its application for U.S. Energy Department loans to fund the development hybrid and electric vehicles after the government tightened its lending standards and the company’s financial standing improved.
“The Department of Energy’s proposed terms were very restrictive and compliance would have negatively affected our operational flexibility,” the Auburn Hills, Michigan-based company said yesterday in a statement.
Chrysler “remains confident in its strategy to bring competitive, fuel-efficient vehicles and technologies to market on schedule.” The decision won’t impact Chrysler’s ability to achieve its financial targets, the company said.
The Chrysler Group was seeking less than $3.5 billion in loans from the government’s Section 136 program, which encourages production of fuel-efficient vehicles.
Chrysler also plans to introduce technology such as natural- gas powered vehicles in the U.S. to help meet 2025 regulatory standards that call for the average fuel economy to rise to 54.5 miles per gallon.
General Motors Co., which also emerged from bankruptcy in 2009, withdrew its application for $14.4 billion in loans in January 2011.
The Advanced Technology Vehicles Manufacturing Loan Program (Section 136 of the Energy Independence and Security Act passed in December 2007) authorized $25 billion in direct DOE loans to companies toward retooling U.S. factories to make vehicles and components that improve fuel economy.