Will Detroit's cash crisis kill the electric car?

By Kevin Krolicki and Nichola Groom

LOS ANGELES (Reuters) - Call it an economic and environmental murder mystery in the making: Will a cash-strapped Detroit kill the electric car -- again?

Stung by an association with gas-guzzling SUVs and pushed to the brink of failure by plunging sales, U.S. automakers have been touting efforts to roll out more fuel-efficient small cars, gas-saving technology and gas-free electric vehicles.

The star of that marketing show has been the Chevy Volt, a rechargeable car that General Motors Corp is designing to run 40 miles on battery power, meaning some commuters would never need to fill up with gas.

But with its cash dwindling and U.S. auto sales crashing to 25-year lows, GM has joined Ford Motor Co and Chrysler LLC in seeking $25 billion in federal handouts, which are under consideration this week by the U.S. Congress.

That has critics concerned that a meltdown for Detroit could delay the rollout of green cars like the Volt. Others see a chance to prod GM and rivals to move faster as a condition of providing funding the industry says it needs to survive.

Because plug-ins like the Volt can be recharged from a cleaner-burning electric grid, proponents see them as the best way in the near term to reduce oil consumption and greenhouse gas emissions from traffic on America's roads.

GM has said it is protecting its investment in the Volt ahead of the vehicle's planned 2010 launch even as it scrambles to slash $15 billion in costs elsewhere.

EV1

"I think right now we're in what I call a serious Act Two moment with oil prices down and money tight," said Chris Paine, whose 2006 documentary "Who Killed the Electric Car?" chronicled GM's controversial decision to scrap an earlier electric car marketed in California as the Saturn EV1.

Paine, who has been working on a Volt-centered sequel, said U.S. automakers would have been better able to weather the current crisis if they had listened to critics who blasted them for turning away from electric cars earlier this decade.

"This may turn out to be the biggest blunder ever for these companies," he said.

GM Chief Executive Rick Wagoner showcased the automaker's commitment to return to making a mass-market electric car at the Los Angeles auto show two years ago.

That reversal by GM combined with an open approach to the Volt's development won over many of the automaker's harshest critics. GM has built on that good will by featuring the Volt in full-page newspaper and TV advertisements, two years before the vehicle will go on sale in limited numbers.

"I think it's somewhat ironic but also encouraging that GM was the first back into the fray," said Chelsea Sexton, who helped market the EV1 in California and has become an advocate for plug-in cars. "There's a humility there that people respond to. Detroit has been knocked down but it's not out."

But with Wagoner due in Washington this week to testify on the proposed bailout for U.S. automakers, GM dropped plans to make an announcement on the Volt's battery supplier at the Los Angeles auto show this week, people briefed on the automaker's plans have said.