Chrysler LLC's plan for a government rescue includes a proposal that the auto makers and federal government establish "an independent joint venture" to develop improved energy technology, such as batteries for electric and hybrid vehicles. At the same time, Cerberus, its private-equity owner, is offering concessions to secure a $7 billion bridge loan.
In his testimony before Congress later this week, Chrysler Chief Executive Bob Nardelli will suggest that part of the $25 billion energy-security fund be put into this new entity, rather than having each of the Big Three try to develop the same critical component. "Then each company would take the technology and add its own branding and styling" and other features for its own models, a Chrysler executive said.
Mr. Nardelli has already spoken to congressional leaders about the idea. His pitch, for an industry driven by intense competition, is based on the need to develop technology in the U.S. now, rather than allow Asia to develop vehicle batteries. "We don't want to trade oil dependence for technology dependence," this Chrysler executive said.
Moreover, such a joint venture would represent a major cost savings for all three companies and recruit "the best and brightest minds" to develop the latest technology.
Chrysler late Tuesday submitted a 14-page document seeking a $7 billion bridge loan based on a "plan that demonstrates viability and accountability." Mr. Nardelli, who is leaving Tuesday to drive himself in one of Chrysler's new hybrid sports-utility vehicles, plans to ask Congress: "Please give us a chance."
Burning through $1 billion a month, Chrysler will have only $2.5 billion in cash at year's end. The company will be "dangerously low" in cash and "liquidity will be an issue" within a few weeks, this executive said. Chrysler already has curtailed every expense and just completed buyouts for 5,000 employees who left before Thanksgiving.
Cerberus has already put in a "significant" amount, as well as funding the separate company, Chrysler Financial. However, "just like banks, there's a limit to what it can invest," this executive said. To demonstrate its willingness to make sacrifices for the federal money, Cerberus will tell Congress that it's willing to convert its debt to equity.