Chrysler backs off of R&D loans

AUBURN HILLS, Mich., Feb. 17 (UPI) -- U.S. automaker Chrysler said that it would cancel its federal loan applications for alternative-energy vehicle development, citing too many strings attached.

"The Department of Energy's proposed terms were very restrictive and compliance would have negatively affected our operational flexibility," the company said in a statement.

The Detroit Press reported Friday Chrysler originally sought $7 billion in loans for research and development of hybrid and electrically powered cars.

The applications were submitted under the Department of Energy's Advanced Technology Vehicle Manufacturing program, The Detroit News said.

Chrysler later cut its request to about $3.5 billion. The firm's Chief Executive Officer Sergio Marchionne had said previously that the funds were necessary to keep Chrysler competitive.

The DOE was gracious about Chrysler's retreat. "While we were continuing to work with Chrysler to come to an agreement, we are pleased that they are capable of achieving their business goals without department support," DOE spokesman Damien LaVera said.