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Revving up electric cars

— Contests and cars are made for each other, as demonstrated every year by NASCAR and the Indy 500. But what about contests to create less polluting, more fuel-efficient cars? The GOP's presumptive presidential candidate, John McCain, weighed in today with ideas aimed at revving up the age of plug-in hybrid vehicles. Will those ideas take root? As usual, the devil is in the details.

In his speech on energy security, McCain suggested a $300 million prize for better batteries and a multimillion-dollar tax credit program for cars that emit less carbon. Those ideas will take their place in the public debate alongside a couple of other prize programs that are already moving ahead:

  • The privately funded $10 million Progressive Automotive X Prize offers an extra payoff for commercially viable vehicles that get the equivalent of more than 100 miles per gallon, while satisfying stringent emission standards. Most of the 70-plus teams on the X Prize list are working on all-electric or hybrid vehicles. The finals are planned in 2010.
  • The federally funded H-Prize program, signed into law late last year, sets aside millions of dollars for advances in hydrogen-based power technologies - and leaves room for future private contributions to the prize pot.

McCain's presumptive Democratic rival in the presidential election, Barack Obama, has his own ideas for encouraging energy alternatives, keying on increased support for biofuels and research into more efficient hybrids.

A lot of attention has been focused on Obama's ethanol connections - at a time when the biofuel strategy has gone through its ups and downs (and ups again?). In contrast, McCain has embraced the new belle of the energy ball, plug-in power: His $300 million prize program would reward companies that produce car-worthy batteries at 30 percent of current cost.

Companies such as GM and Toyota are already scrambling to find better batteries for their product lines in 2010 (such as the Chevy Volt or Toyota's plug-ins). Do they really need more of an incentive to pick up the pace? Andy Frank, a researcher at the University of California at Davis who has been working on hybrids for 30 years, says the extra cash would help.

"What the car companies are doing is sticking their toe in to test the temperature, so McCain is saying, we've got to do this now." Frank told me today. "I think McCain is trying to get the big guys to jump in the pool instead of testing the waters."

Frank said a reduction in battery cost is not only doable, but absolutely necessary in order for plug-in hybrids to make a difference in the auto marketplace.

"Right now, batteries cost about twice what they should. You need to get the cost down by a factor of two," he said.

In Frank's view, bringing down the cost of batteries shouldn't require a radically new technology, such as the ultracapacitors that are often held out as the route to power paradise. He said lithium-ion batteries, which are starting to make their way into automobiles, should do the trick - assuming that the industry can standardize big time on the right technological approach.

"You've got to get the volume up to about 50,000 or 100,000 units a year. ... The problem is that the battery technology is there, but there are about nine ways to do lithium batteries," Frank said. "In order to get the high volume, the car companies have to cut down the focus to a specific technology, so we can get the supply of lithium down to a point where this particular number is achievable."

A $300 million incentive could coax the car companies to ramp up production more quickly than they would otherwise, Frank said. "High volume is what drives the price down," he said.

The $5,000 zero-emission tax credit would also help. In fact, GM Vice Chairman Bob Lutz said this spring that the Chevy Volt would cost $40,000 or more to make, and that it would take government incentives to bring the price tag closer to the original target of $30,000.

There are potential downsides to the prize program approach:

  • The proposal could be perceived as pandering to a public wearied by $4-a-gallon gas.
  • The program might be seen as a giveaway to a multibillion-dollar industry that already has enough free-market incentive to use better batteries.
  • If the prize is established, the government might be tying up money without knowing exactly when (or if) it would be paid out.
  • The prize would target a particular technological approach to the potential exclusion of others (for example, better biofuels or better mass transit).
  • The biggest downside would be if the rules for the prize (or the tax credits, for that matter) were written with loopholes big enough to drive a gas guzzler through. Today's speech doesn't have nearly enough detail to make a judgment on that score.

The reaction to McCain's proposal from the blogosphere has been mixed. (Isn't it always?) Autoblog Green's Domenick Yoney says "it all sounds pretty good," while Climate Progress says it's just "another energy gimmick." What do you think? Feel free to add your comments below.

Update for 11:30 p.m. ET: I fixed the references to the battery cost reduction to bring them in line with McCain's proposal.