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President Barack Obama on Monday said U.S. automakers General Motors and Chrysler will require further restructuring to receive additional government aid.

In a press conference at the White House, Obama, flanked by members of his Cabinet, detailed the measures the administration is imposing on the struggling companies following the evaluation of his auto industry task force.

President Obama announces initial findings of the government's auto industry task force.

(Credit: Screen capture by Martin LaMonica/CNET)

The U.S. government will give GM working capital for 60 days but has demanded additional concessions from GM bondholders, union workers, and management. Rick Wagoner was asked to step aside as CEO and will be replaced by Frederick "Fritz" Henderson.

In its evaluation, the U.S. government found Chrysler less financially viable. An additional $6 billion loan is contingent on Chrysler striking a partnership with Fiat or another automaker in the next 30 days.

In his comments, Obama made clear that the administration considers fuel-efficient vehicles integral to revitalizing U.S. automakers.

"I am absolutely committed to working with Congress and the auto companies to meet one goal: the United States of America will lead the world in building the next generation of clean cars," Obama said. He noted that many American-made car companies, including GM, have made significant advances in producing fuel-efficient cars.

The administration determined that bankruptcy is one possible way to restructure GM quickly, although Obama said he opposes a drawn-out legal proceeding or dismantling the company. "What I am talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down," he said.

Updated at 12:20 p.m. PDT with information from president's auto industry task force report on GM.

Following a review of the ailing U.S. automakers, the Obama administration has ousted General Motors CEO Rick Wagoner and has withheld more loans to Chrysler, according to reports.

On Monday, General Motors put out a statement that Wagoner was asked to "step aside" as CEO of GM. Chief Operating Officer Frederick "Fritz" Henderson is now CEO, and changes to GM's board of directors are expected.

(Credit: Martin LaMonica/CNET)

The restructuring plan for GM has four elements: sustainable profit, healthy balance sheet, more aggressive operational restructuring, and technology leadership, according to the GMBlogs Twitter account, which is run by GM communications professionals.

Obama administration officials are expected to provide an update on the auto industry rescue plan on Monday but are demanding concessions before releasing any of the $21.6 billion that GM and Chrysler are requesting in additional loans, according to an article in the The Wall Street Journal.

The federal government could recommend that GM enter into bankruptcy, according to the article. Chrysler is considered more precarious financially: $6 billion in additional loans are contingent on the automaker forging an alliance with Fiat in 30 days.

For GM, it's not clear how a more dramatic restructuring program will influence the company's technology development programs, including investments in fuel-efficient cars and plug-in electric vehicles.

At a recent briefing on GM's Chevy Volt electric sedan, executives said the program continues to be on track and that the company continues to devote resources to it.

The Chevy Volt, which runs 40 miles on a battery pack and draws on a gasoline engine for longer trips, is still scheduled for delivery in late 2010. But the sedan will have lots of competition from an anticipated wave of all-electric and gas-electric sedans coming from large automakers and start-ups in the next two years.

In its assessment of GM, the president's auto industry task force said that the company was at least one generation behind Toyota in "green" powertrain development.

"In an attempt to leapfrog Toyota, GM has devoted significant resources to the Chevy Volt. While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable," according to the report. (Click for PDF).

The report also concluded that GM relies too heavily on high-margin SUV and truck sales and that the company is more vulnerable than competitors to increases in the CAFE fleet fuel-efficiency standards.

"Many of its products fail to meet the minimum threshold on fuel economy and rank in the bottom quartile of fuel economy achievement," according to the report.

Chrysler's General Electric Motorcar delivered the first six, out of the thousands of NEVs the U.S. Army plans to lease in the coming years.

(Credit: U.S. Army/General Electric Motorcars)

The Big 3 of Detroit aren't the only ones singing the praises of electric vehicles this week.

The U.S. Army on Monday announced an initiative to potentially replace up to 28,000 gas-powered vehicles at more than 155 Army installations with Neighborhood Electric Vehicles (NEVs) in the coming years.

NEVs are not highway-legal electric vehicles, but rather light-use electric vehicles with a maximum speed of 25 mph. The Army intends to use them for nontactical things like on-base transportation for visitors, or maintenance personal and their equipment, according to Paul Bollinger, deputy assistant secretary of the Army for Energy & Partnerships.

Plans are already in the works to replace 4,000 gas-powered vehicles over the next three years with leased NEVs through a partnership with the General Services Administration (GSA), the U.S. government's main procurement agency.

Global Electric Motorcar (GEM), a division of Chrysler, delivered the first six NEVs to Fort Myer, Virginia on Monday. Two of the NEVs are four-seat sedans. The other four are two-seat trucks with flatbeds and a payload capacity of 1,000 pounds. Both models have a range of 30 miles at 25 mph on a full eight-hour battery charge, and cost about $10,200 each.

While GEM is the first manufacturer to have won a contract for this initiative, it will not be the only supplier. Contracts are still open for bid to any company on the GSA's approved vendor list, Bollinger said.

The Army expects to replace a total of 800 army vehicles with NEVs this year, and replace 1,600 per year for 2010 and 2011.

By replacing 4,000 gas-powered vehicles with NEVs the Army will save 11 million gallons of fuel and 115,000 tons of carbon dioxide emissions over the 6-year life of each vehicle, according to a statement from U.S. Army.

As part of the lease agreement, GEM will take care of battery replacement and maintenance costs.

One of the leading reasons the U.S. Army ultimately decided to go with NEVs as opposed to hydrogen or another alternative fuel vehicle, according to Bollinger, is that NEVs require little infrastructure to implement.

"These plug into any three-prong electrical outlet. There's nothing big or complicated about it whatsoever. Most will go into depots where they come into a central area to be charged," Bollinger said during a press teleconference.

The Army has estimated no more than $200 per vehicle for implementation, in the event that a three-prong electrical outlet is not readily available for the NEV to plug into and needs to be installed. And it expects to pay about $400 in electrical power for each vehicle per year, according to Bollinger.

While a potential 28,000 vehicles is good news for those electric vehicle manufacturers on the GSA's list of approved vendors, there could be even more orders soon up for grabs from two other branches of the military.

"No one from the Air Force has told me face-to-face that they would like to move in this area, but I've heard it in back channel communications. But the Navy has told me. They are interested in piggy-backing on the Army's order," said Bollinger.

GEM's four-seater sedan.

(Credit: U.S. Army/General Electric Motorcars)

Rather than focus solely on muscle cars, embattled U.S. automakers General Motors, Ford, and Chrysler touted a coming generation of electric vehicles at this year's North American International Auto Show in Detroit.

Ford on Sunday detailed a multi-prong electric car strategy, saying it will have an all-electric commercial van by 2010, an all-electric passenger car by 2011, and plug-in hybrid vehicles in 2012.

GM vice chairman Bob Lutz drives up in an extended-range electric Cadillac concept car, the Converj.

(Credit: GM)

The firm, which is healthier financially than GM or Chrysler, partnered with Magna International to develop an electric passenger car that can go 100 miles on a charge from lithium-ion batteries. Ford will add hybrid versions of existing cars, including the Fusion Hybrid and Mercury Milan.

To help establish consumer interest in electric cars, Ford said it is partnering with utility Southern California Edison to test a fleet of plug-in vehicles and has established partnerships with city governments in China to promote sustainable technologies and cities.

Derrick Kuzak, Ford's group vice president of global product development, told the Associated Press the automaker expects to start selling 5,000 to 10,000 electric vehicles annually.

General Motors on Sunday showed of a concept Cadillac Converj which will be able to drive 40 miles off lithium-ion batteries. It will be outfitted with the same extended-range electric powertrain planned for the Chevy Volt.

The interior of the concept car, the Chrysler 200C EV.

(Credit: Chrysler)

GM also introduced a four-door "mini car" called the Chevrolet Spark, originally a concept called the Chevy Beat, which will be available in Europe in 2010 and in the U.S. in 2011

On Monday, GM is expected to announce that it will begin manufacturing car batteries in Michigan, according to reports. Japanese and Korean manufacturers have gotten the upper hand in car battery production, prompting auto companies and politicians to call for programs to encourage U.S. lithium-ion battery manufacturing.

Toyota at the auto show said that it will bring a small all-electric car to market in 2012 and test plug-in hybrid Priuses with lithium-ion batteries later this year.

Chrysler, meanwhile, at the auto show on Sunday showed a concept electric sedan called the 200C EV with a streamlined interior dashboard. The company also plans to have an electric edition of its Jeep Patriot as well.

The extended-range electric Chrysler mini van.

(Credit: Chrysler)

Updated 10:30 a.m. PDT: Added photos and a link to Chrysler's electric car site.

Struggling automaker Chrysler on Tuesday unveiled a line of electric cars scheduled to start shipping at the end of 2010.

The surprise announcement brings Chrysler in direct competition with General Motors, which last week showed off the Chevy Volt, an extended-range electric car also due in late 2010.

Chrysler's plans call for two electric cars, using the same concept as the Volt and two other all-electric cars.

The extended-range electric Jeep Wrangler.

(Credit: Chrysler)

Chrysler's top executives showed off an extended-range electric Jeep Wrangler and a mini-van to CNBC on Tuesday.

As with the Volt, lithium-ion batteries will power the car for the first 40 miles and a small, one-liter, internal combustion engine will charge the battery for longer rides. A consumer will be able to charge the batteries in eight hours from a U.S. 110-volt outlet or four hours from a 220-volt outlet.

"The range is about 400 miles on eight or nine gallons of gas," Chrysler Vice Chairman Tom LaSorda told CNBC. Chrysler also unveiled a prototype of an all-electric sports car, called the Dodge EV, which can go 150 or 200 miles on a charge and accelerate from 0 to 60 miles per hour in under five seconds.

A prototype of the Dodge EV, an all-electric sports car.

(Credit: Chrysler)

Finally, CEO Bob Nardelli said that Chrysler intends to make an all-electric city car based on its Peapod, a small electric car that runs on batteries only.

The Wall Street Journal on Tuesday reported that Chrysler will partner with battery maker A123 Systems. GM may choose A123 Systems' batteries for the Volt.

On Tuesday, Chrysler released technical specifications for all of the four cars it unveiled.

The Peapod, the basis for a planned all-electric city car.

(Credit: Chrysler)