GM and Chrysler shut out of $25 billion energy efficiency program

General Motors Corp. (GMGAQ) and Chrysler LLC, the two bankrupt automakers, have been shut out of a new $25 billion government program designed to encourage the development of fuel-efficient cars that is expected to be announced today, according to The New York Times.

"General Motors had said that the $8.3 billion it was seeking would be used for the development of the Chevy Volt, a plug-in hybrid car," the Times said. "Chrysler had been asking for $5 billion. Both companies had been lobbying heavily for the money."

The Chevy Volt will be able to go 40 miles on a full charge. The plug-in hybrid, seen as a linchpin for GM's future growth, is due to be sold in 2010. The first Chrysler Group products to feature hybrid electric vehicle technology it's developing with GM and Mercedes-Benz were the 2009 Dodge Durango Hybrid and 2009 Chrysler Aspen Hybrid.

The companies are in a Catch-22. They got billions of dollars in debt by relying too heavily on gas-guzzling pick-up trucks and SUVs. Everyone agrees that they need to make greener cars. But the problem now is that they are so broke they can't afford to retool their factories. Unfortunately for GM and Chrysler, some of their rivals are seen as being financial stable enough to qualify for the government program.

Ford Motor Co. (F) is getting $440 million to help convert a Michigan sports-utility factory to build small cars, the Times said.

Nissan Motor Co. scored an undisclosed amount of money to develop electric vehicles. Reuters reports that the Japanese automaker expects to initially produce more than 10,000 electric vehicles in the U.S. "Nissan had chosen a site in Tennessee to make electric vehicles and batteries, Carlos Ghosn, chief executive of Nissan and French partner Renault told reporters after Nissan' annual shareholders' meeting," according to Reuters.

Nissan's electric car has gotten lots of positive press.USA Today called it "zippy" and notes that the 100-miles-a- charge it gets is more than double the Chevy Volt, which gets 40.

The race to build the green car of the future is one that GM and Chrysler can not afford to lose. Too bad the companies are already falling behind their rivals.

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