Business Snapshots

By The Associated Press - 09/27/2008

Discover 3Q profit falls, but tops estimates

NEW YORK (AP) — Discover Financial Services' profit fell 11 percent in the third quarter but its lucrative card processing business drove the results above Wall Street's expectations.

The profit decline reflected a big increase in its allowance for loan losses as it wrote off more loans and set aside money for loans that may go sour amid deteriorating credit market conditions.

The Riverwoods, Ill.-based company reported Thursday its net income fell to $180 million, or 37 cents per share, in the quarter ended Aug. 31.

Chrysler debuts electric car

prototypes

AUBURN HILLS, Mich. — Chrysler presented three functioning battery-powered vehicles on Tuesday and thrust itself to the forefront of the race to build mass-market electric cars.

In unveiling a minivan, a Jeep Wrangler and a sports car, Chrysler's executives spelled out plans for a future where most, if not all, automobiles use electric motors for propulsion — essentially sounding the death knell for the internal combustion engine.

Chrysler officials declined to say how much the vehicles would cost, nor would they discuss which would be released first.

ut the third-largest U.S. automaker said it would put hundreds of electric cars in test fleets next year and would bring one of the models to market by late 2010, with more electric cars to follow soon thereafter.

"We're not talking about a single electric car," said Robert Nardelli, chairman and chief executive of Chrysler. "We're talking about a full line of cars that ... allows us to be energy independent going forward."

That such news came from Chrysler, the industry's downtrodden underdog — and the carmaker with the heaviest reliance on large pickup trucks and SUVs — was almost astonishing. The smallest of the Big Three has seen its sales slip 24 percent so far this year, has been forced to end its once-lucrative leasing program, and has all but ceded production of small cars to other automakers.

"I didn't think they were a player," said Jim Hossack, vice president at industry consultancy AutoPacific. "I'm impressed. This suggests a lot of bravado."

While other automakers, including Toyota Motor Corp. and Renault, have made increasingly loud noises in the recent months about producing electric and plug-in hybrid vehicles, Chrysler has been almost invisible, doing little more than presenting a trio of electric concept cars in January.

As a result, Tuesday's unveiling blindsided much of the industry. Just a week ago, General Motors Corp. unveiled its production prototype of the much-hyped Chevy Volt. But unlike Chrysler's offerings, the Volt was not operational.

Some observers remarked on the timing of Chrysler's announcement. In recent weeks, Chrysler, GM and Ford Motor Co. have been lobbying for Congress to fund $25 billion worth of loan guarantees written into last year's energy act. Those loans were designed to help automakers and suppliers pay for the costs of retooling factories to build vehicles that will comply with new, stricter federal fuel economy standards. But the loans were never funded.

By showing off new technology like electric cars, critics say, Chrysler and others are attempting to curry favor with legislators.

"I don't think it's coincidental that we've got GM and Chrysler showing off electric vehicles just as the industry goes to Washington to make their case," said Erich Merkle, auto industry analyst at Crowe Horwath.

(Optional add end)

At the event Tuesday, Nardelli said that he recently has been in contact with House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., and House Energy and Commerce Chairman John Dingell, D-Mich.. "We're trying to be clear that these investments qualify for the loans," he said. Executives at GM and Ford Motor Co. also have been in talks with lawmakers.

Two of the vehicles unveiled Tuesday — the Town & Country minivan and the Jeep Wrangler — are based on existing vehicle platforms. Each combines an electric motor, a battery and a 1-liter gasoline generator.

According to Frank Klegon, Chrysler's head of product development, they will be able to go 40 miles on battery power alone before the generator kicks in, giving them another 360 miles of range. They will come in front-wheel drive, rear-wheel drive and four-wheel drive options, so that, "Enthusiasts will be able to roam the planet while taking care of it at the same time," Klegon said.

The third vehicle, a Dodge-branded coupe based on a platform designed by English carmaker Lotus, runs only on battery power. Tiny, flashy and lightweight, it accelerates to 60 mph from a standstill in fewer than five seconds and can travel 150 to 200 miles on a charge.

Those specs make it similar to an electric car already on the market, the Tesla Roadster. That $109,000 car is also based on a Lotus platform, runs on battery power alone and breaks the five-second acceleration barrier.

Chrysler Vice Chairman Jim Press said that a recharge of the vehicles' batteries, which could take about four hours on 220 volt-current, would cost as little as 70 cents.

Battery technology is critical in any electric vehicle — particularly so with lithium ion batteries, the chemistry "du mode," but one that has proved difficult to perfect. Chrysler said it was working with several possible suppliers, including Massachusetts-based A123 Systems, which is also working on batteries for GM.

Toyota, which has become the industry leader in hybrid technology thanks to its Prius, has announced plans for a plug-in version of that car that would have a longer all-electric range and better efficiency. Test versions are due out in 2010. Other carmakers, such as Nissan and Mitsubishi, have said they will produce all-electric cars, with the latter planning to begin selling them in Japan next year.

Among American automakers, Chrysler has been the slowest on alternative drive-train technology. While both GM and Ford have had hybrids on the market for several years, only now is Chrysler delivering its first hybrids — full size Dodge- and Chrysler-branded SUVs — to dealership lots.