Faced with a cash crunch as its sales continue to lag well behind its recovering rivals, Chrysler has reportedly disbanded a high-profile engineering team that had been developing a lineup of electric vehicles.

Reuters reports, “The move by Fiat SpA marks a major reversal for Chrysler, which had used its electric car program as part of the case for a $12.5 billion federal aid package.” 

The ENVI research team had shown prototypes of four electric vehicles to members of the press, and to members of President Obama’s auto industry task force, as recently as last spring.  The four included several so-called Extended-Range Electric Vehicles – electric cars that carry an onboard gasoline-powered generator to recharge their batteries in motion when necessary.  Journalists have seen working examples of an E-REV minivan, an E-REV midsize car and an E-REV edition of the Jeep Wrangler, while a high-performance electric sports car was reportedly headed for production for the 2010 model year.

As recently as August, Reuters notes, Chrysler “took $70 million in grants from the U.S. Department of Energy to develop a test fleet of 220 hybrid pickup trucks and minivans, vehicles now scrapped in the sweeping turnaround plan for Chrysler announced this week by Fiat CEO Sergio Marchionne.”

In a recent presentation outlining the company’s future product plans, Autoblog notes, “Marchionne said …that electric vehicles are still a very tough proposition with current battery technology. In fact, the automaker expects that less than two percent of its lineup will be electric by 2014, which would amount to less than 60,000 vehicles per year.”

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