Battery grants: Tiptoeing around reality?

Will these save the US auto industry?

Just a short while ago, President Obama officially announced his plan to provide some $2 billion in grants to develop a battery industry in the US claiming that 'We failed far too long to invest in innovative technology'.

Such as the billion GM lost on the EV1? Such as the $1 billion + the Clinton Administration granted automakers to develop the next generation of fuel efficient vehicles? That's a couple a billion for innovative technology right there.

While I support these grants, other such efforts have been made in the past. They failed for one reason: cheap gasoline prices. Perhaps gasoline prices will be more supportive of such innovations this time around, but such a bet is still a significant gamble.

For instance, much of this gamble is being bet on plug-in vehicles, such as the Chevy Volt - a vehicle that is going to lose a massive amount of money for at least the next decade. According to the likes of JD Power, etc., such vehicles are going nowhere fast in the next decade. In fact, it will be decades before such vehicles represent at least 10 percent of America's auto fleet.

Even worse, ironically, according to the Volt's father, Bob Lutz, energy prices don't support hybrid cars like the Toyota Prius. Well, the economics of plug-ins like the Volt require significantly higher energy prices than conventional hybrids to achieve cost-effectiveness.

Are these battery grants really any different than what has been tried in the past? Ultimately, isn't innovative fuel efficient technology solely dependent upon energy prices?