General Motors‘ bondholders rejected a debt-for-equity swap and so have set into motion the likely bankrupting of GM. This could be the largest industrial bankruptcy in American history. GM has until the end of the month to convince government officials that it’s solvent, but with over $100 billion in red ink, it’s not likely to happen.
Chrysler officially declared bankruptcy last week amongst cries from various political parties and pundits over the whys and hows of the deal. Despite billions in government bailouts and massive cutbacks by the company–even the restructuring of agreements with United Auto Workers and several of Chrysler’s debtors–the company could not avoid the inevitable.
Read More: Chrysler, Fiat, Bankruptcy and Renewal: Can Fiat Win U.S. Over?
Chrysler unveiled the first four of an eventual 250 battery-powered electric minivans for the U.S. Postal Service (USPS). The vans are based on the automaker’s Town & Country EV that was shown off late last year in LA. Because they are meant for Post Office duty routes (which are relatively short range), they are being built without the accompanying range-extending motor, so they’ll be all-electric rather than plug-in hybrids.
Read More: Chrysler’s New Electric Minivan for the US Post Office
Both General Motors and Chrysler have been told by the Obama administration’s automotive task force that they should prepare for bankruptcy. The U.S. Treasury has announced that they’re prepping plans to put Chrysler into Chapter 11 for a fast reorganization, which could happen before the month is out.
GM has already announced that Pontiac will be gone by 2011 and will be unloading Saab, Saturn, and Hummer before the end of the year. In all, there are 13 total GM brands hitting the bricks over the next 2 years. This is according to GM’s latest “viability plan” submitted to the government.
The Saturn brand is one of those likely to be sold off entirely, though the company has said that they are willing to continue production of Saturn vehicles as a contract assmebly deal. This would make a buyout of Saturn by Saturn dealerships viable–one of the known offers on the table right now.
Read More: GM and Chrysler Likely Facing Bankruptcy - GM Drops Pontiac and Saturn Brands
The Obama Administration plans to send another $285 million in funding to Detroit to purchase 17,600 new vehicles from the Big 3 before June 1st. The loose requirements for these “green” vehicles is that they manage to get at least 10% improvements in overall fuel efficiency from their counterparts.
Read More: More Bailouts for the Big 3 in Detroit
Unlike many automakers who have only one electric vehicle they’re pushing, Chrysler is working on a full line of them in order to cut costs and improve quality. While other companies like GM are focusing on one vehicle as the starter for a platform, Chrysler is focusing on the platform itself.
Read More: NY Auto Show: Chrysler’s ENVI Showcase
Tesla Motors has already run into the problem with that the Department of Energy’s Advanced Technology Vehicle Manufacturing Incentive Program’s loans don’t apply to them. Not because of their technology, but because they can’t put up matching loan funds to secure the loan.
The ATVM program requires that those applying for the loans put up matching equity funds and demonstrate their financial viability. Tesla was unable to do that and General Motors and Chrysler are in the same boat. GM can’t even convince the Obama Administration that it’s viable, let alone the DoE. Chrysler is likely to find itself in that same predicament, since they were given 30 days to clean up their financial quarter or face bankruptcy.
Read More: No DoE ATVM Loans For GM or Chrysler Either
In announcements that surprised no one, both Chrysler and General Motors have announced their battery suppliers for plugins and electrics. One announcement was made in the usual on-screen handshake and press release and the other was made amidst heavy fanfare and money-wasting jubilee. One guess as to which was which.
Read More: Chrysler and GM Pick Battery Suppliers
Both General Motors and Chrysler are again begging for bailout funds. They want another $14 billion (to make their total bailout now $39 billion). They started asking for the increased handout Tuesday.
Read More: Detroit Still Begging At the Bailout Trough
Chrysler (finally) figured out their weak spot: a total lack of small, fuel-efficient cars. They’ve made a move to fix that by penning a deal with Fiat. The deal, from Fiat’s perspective, is pretty sweet and sour. They get 35% of Chrysler in exchange for Chrysler having full access to their small car platforms for development and rebranded sale.
Read More: Chrysler Gets Bailout From Fiat
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