NEWS ANALYSIS

3 strategies, with the wolf at the door

GM, Ford and Chrysler place new-product bets

DETROIT — Call it Chrysler's Hail Mary strategy.

Caught in a vise between looming federal fuel economy regulations and its own desperate financial circumstances, Chrysler LLC revealed last week that it will put a line of electric vehicles into production — one of the vehicles in 2010.

With its revelation, Chrysler hoped to silence critics who said the company had no new products to brag about. The tactic also buys more time for Chrysler to find partners to help it introduce fuel-efficient cars and trucks.

"These are extraordinary times for the auto industry," said Chrysler LLC CEO Bob Nardelli as his company unveiled three electric vehicle prototypes. Chrysler has no option but to invest in alternative powertrain development, even if it means "gut-wrenching" decisions to cut other projects, Nardelli said.

Now, the battle lines have been drawn. Each of the Detroit 3 has a distinct, high-stakes survival strategy.

Ford Motor Co. is betting on a batch of small cars developed in Europe to attract buyers seeking fuel efficiency. Meanwhile, General Motors is investing in a varied range of smaller vehicles and efficient powertrains.

While the Chevrolet Volt plug-in hybrid has generated headlines, GM believes it can generate high-volume sales with the less exotic — but fuel-efficient — vehicles such as the compact Chevy Cruze.

Like Chrysler, Ford and GM hope their big plays will be game-changers by 2010, when pent-up customer demand could bring customers flocking back. Here's a look at their survival strategies:

Three ways
1 goal, 3 strategies for Detroit 3
Chrysler: Plans to line up partners to develop small cars. Says it will market an electric car in 2010 and spread electrics through existing lineup
Ford: Small cars, small cars, small cars. Ford will bring 6 European small cars to U.S.
General Motors: Volt plug-in, yes, but also an array of hybrids, plus fuel-efficient diesels and gasoline engines

Chrysler

Chrysler is negotiating partnerships with other automakers to develop new small cars that will help it meet fuel economy standards.

But so far, only its partnership with Nissan has produced results. Nissan will build a small car called the Dodge Hornet, which is scheduled to arrive in 2010.

Chrysler's partnership with Chery Automobile Co. in China was supposed to produce a second small car, but it is still a work in progress.

Yet another partnership with BMW, Daimler and General Motors has allowed Chrysler to develop a hybrid powertrain for the Ram pickup.

That powertrain — a Two Mode hybrid produced by the Hybrid Development Center in suburban Detroit — also will power two Chrysler SUVs.

But Chrysler's product portfolio still looks thin. Now that the redesigned Ram has debuted, dealers will not get any all-new vehicles until the first quarter of 2010.

So Chrysler's surprise introduction of three electric cars appears calculated to show that it can develop its own technology.

Chrysler is under pressure to show it can qualify for a share of the $25 billion federal loan package approved by the U.S. House last week. That money is available only to automakers who develop highly fuel-efficient vehicles.

Chrysler's electric-vehicle strategy differs from that of GM, which created the Volt as an all-new vehicle.

Chrysler said it doesn't have the money to design new platforms and new powertrains at the same time. So Chrysler's electric powertrains will be adapted to existing vehicles over the next five to 10 years.

Of the three cars shown last week, the Chrysler EV (a Town & Country minivan) and the Jeep EV (a Wrangler) were plug-in hybrids powered by an electric motor and equipped with a gasoline engine to generate power when the lithium ion battery loses charge. The Dodge EV, a Lotus-based sports car, is a pure electric.

But Chrysler needs more than a handful of electric cars to survive. It needs more alliances to bring volumes of high-gas-mileage cars, and soon.

GM

General Motors is placing a big bet on the Volt, which is scheduled to arrive in 2010.

But GM has an array of other vehicles — and powertrains — under development.

For example, the company is designing a turbocharged 1.4-liter engine that could help the Cruze top 40 mpg. In short, the company is spreading its bets. GM Powertrain chief Tom Stephens says there is no "magic bullet" for increasing fuel economy in all vehicles.

GM says its fuel cell — which makes electricity from hydrogen — will be ready for production by 2012. GM also is rolling out a new, fuel-efficientm, 4.5-liter diesel engine for light-duty trucks.

GM's hybrids range from a simple bolt-on starter-alternator in the Chevrolet Malibu and Saturn Vue to the Two Mode rear-wheel-drive transmissions that are available in the Chevrolet Tahoe, GMC Yukon and Cadillac Escalade.

Ford

CEO Alan Mulally has a plan, and he is sticking to it. Ford is banking on its European design and technology as it transforms its vehicles.

Over the next three years, Ford will introduce at least six small European-bred cars in the United States. Those cars most likely will be the new European Focus compact four-door, five-door and convertible; the new Fiesta subcompact; and the European Focus-based C-Max and Kuga small crossovers.

Ford is expected to offer the cars with EcoBoost engines, which combine turbocharging and direct injection. And they will be assembled in North America.

Ford also is putting its vehicles on a diet. Derrick Kuzak, Ford's product development chief, has said Ford vehicles will lose an average of 700 pounds with the use of smaller engines and lightweight materials. Last week, Kuzak said Ford's lineup of compact, or C-class, vehicles will form the heart of Ford's lineup

Ford appears behind the competition in the race to introduce plug-in hybrid cars. But Ford's European-inspired lineup offers the company's best prospects for a turnaround, says John Casesa, an analyst for Casesa Shapiro in New York.

"These three companies are emphasizing different parts of strategies, but they're all under the gun," Casesa says.

"They all have to do what Ford's doing. ... A few electric cars will not be enough to meet CAFE requirements."

Jamie LaReau and Richard Truett contributed to this report

You can reach Bradford Wernle at bwernle@autonews.com

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