Chrysler to Launch Electric Fiat 500 With A123 Batteries in 2012

Chrysler and Fiat plan to launch an electric version of the Fiat 500 minicar packed with lithium-ion batteries from A123Systems (s AONE) in the U.S. in 2012, Chrysler announced today. It will mark the pair’s first all-electric model, and a big year for A123 as it finds its footing as a large scale battery maker.

Chrysler tapped battery company A123Systems last year as the supplier for at least the first generation of plug-in vehicles in its planned ENVI lineup. The automaker has largely scrapped the original ENVI plan, however, making clear in the 5-year plan it unveiled last November that it won’t kick into high gear with electric cars for the consumer market until 2011 and beyond.

Chrysler explains that the Fiat 500EV powertrain includes three main systems: an electric powertrain module, a lithium-ion battery pack, and a control unit, “to manage power flows.” The company says that it will house all powertrain engineering and vehicle development at its Michigan headquarters. The bulk of the manufacturing, however, will take place elsewhere. According to the Detroit Free Press, a location has not been determined for powertrain manufacturing, but the rest of the vehicle will be assembled in Toluca, Mexico.

Chrysler showed a concept for an electric version of the subcompact in January at the Detroit Auto Show. But sources told Autoweek at the time that the automaker did not have “immediate plans” to sell the model in North America. This morning, Chrysler announced that it’s plowing ahead with a Fiat 500EV and targeting a price range that “will be competitive with similar electric vehicles in the market.”

Chrysler, now managed and partly owned by Italy’s Fiat, will be getting some help from the U.S. government in its electrification efforts. As part of the $2.4 billion battery grant program, the Department of Energy has awarded Chrysler a grant for up to $48 million to build 140 plug-in hybrid versions of its Dodge Ram truck in a 3-year demonstration project. These demo vehicles will use batteries from Electrovaya, based in Mississauga, Ontario (see: 20 Battery Startups Hitting the Road With Lithium-ion).

With Fiat on board and looking to re-introduce several of its brands on the North American market, the electric lineup could eventually include some lighter-weight entries based on Fiat’s array of compact and subcompact vehicle platforms. Giving electric drive and decent battery range to these smaller cars could be less complicated than Chrysler’s earlier plans to electrify heftier models like the Town & Country minivan, Jeep Wrangler and Patriot SUVs. Chrysler’s Scott Kunselman, Senior Vice President Engineering, said in a statement this morning, “The Fiat 500 is a small, lightweight platform perfect for integrating electric-vehicle technology.”

But it’s out with the old and in with the new this morning. Chrysler also confirmed today that it “has decided to cancel development work” on the 2011 hybrid version of its Dodge Ram pick-up truck (originally announced in 2008) because, “After closely evaluating the response to hybrid pickups in the marketplace, the company could not formulate an appropriate business case,” for the model.