As GM powers on, Chrysler pulls out of EV race

Two ailing US car manufacturers diverged in their approach to electric vehicles this week, with GM approving proposals for a plug-in Cadillac hybrid, while Chrysler controversially shelved plans for electric vehicles in a move that could bring it into conflict with the federal government.

According to reports, Chrysler has scrapped its electric vehicle programme, despite promises it would improve the fuel efficiency of its fleet and bring electric vehicles to market from 2011 as part of the deal that saw the US government prop up the company with $12.5bn (£7.5bn) of taxpayers' money.

However, plans to develop three electric vehicles have now been discontinued, according to reports from news agency Reuters.

An internal development team, working under an environmental division called "Envi" that was set up by the company's former owner Cerberus Capital Management in 2007, has been disbanded and reallocated to other parts of the company.

The move to scrap the electric vehicle programme was reportedly the decision of Italian automaker Fiat, which somewhat ironically was handed a 20 per cent stake in the automaker by the US government in return for access to a range of its fuel-efficient technologies.

In August, Chrysler accepted a further $70 million (£42m) in grants from the Department of Energy, which was to be used to fund the development of 220 hybrid pick-up trucks and minivans.

In stark contrast, General Motors' board has reportedly approved a plan to develop a plug-in hybrid under its iconic Cadillac brand, using technology developed for its much-anticipated Chevrolet Volt plug-in hybrid vehicle.

GM is aiming to launch the Volt at the end of next year, and is hoping to sell 10,000 models during 2011. The Cadillac model, which will represent its second long-range plug-in vehicle, will likely ship at the end of 2012.