Although Chrysler used its program to develop a range of electric cars as partial justification for receiving $12.5 billion in federal aid, the company has now disbanded the engineering team dedicated to that endeavor and dropped its sales target for battery-powered vehicles.

In August, Chrysler accepted grants from the Department of Energy totaling $70 million to create a test fleet of hybrid pickups and minivans. That plan has now been canceled as well in the details of a corporate turnaround strategy announced by Fiat CEP Sergio Marchione.

Under its previous owner, Cerberus Capital Management, Chrysler established a "Envi" division, a word derived from "environment" as its development center for hybrid technology, a sector in which Chrysler lagged severely when compared to the competition. According to a spokesman, Nick Cappa, Envi has now been absorbed into the company's normal development arm.

The moves are a sharp departure from Chrysler's announcement last January at the Detroit Auto Show that it would have 500,000 battery-powered units on American roads by 2013. Marchione's rationale in putting electric vehicle development on the back burner is that the cars will struggle "until the (battery) storage gets resolved."

Marchionne is working to put Chrysler at a break even point on a net basis by 2011. This involves doubling sales over a five-year period and introducing more than a dozen new models built on Fiat platforms. Electric vehicles obviously do not offer the profit potential the company needs so badly at this time.