There seems to have been some much-needed progress recently in the race to develop lithium-ion batteries powerful enough and long-lasting enough to fuel so-called plug-in hybrid vehicles (PHEVs).

Last week, General Motors said there is still some hope that the company will be able to release its Chevy Volt PHEV vehicle by 2010. Prior to last week’s announcement, the financially-troubled auto giant was saying it still hadn’t found batteries sufficiently powerful to drive the Volt. Most recently, however, GM said it was selecting Korean manufacturer LG Chem as a supplier of lithium-ion batteries for the Volt. GM officials said they are also working with A123Systems, a Watertown, MA, maker of lithium-ion batteries founded in 2001.

At the same time, Toyota said it will sell some PHEV vehicles with lithium-ion batteries late this year.

The other bit of good news is that A123Systems, which also is reportedly working with Chrysler, is pushing for financing to build a lithium-ion battery manufacturing plant in southeastern Michigan. A123Systems says it is seeking $1.84 billion from the federal Department of Energy’s Advanced Technology Vehicle Manufacturing Incentive program to build a 7 million-square-foot plant that would employ as many as 14,000 workers and supply lithium-ion batteries for hybrid and PHEV vehicles. The plant would be the first major lithium-ion manufacturing plant in the U.S.

No doubt about it, $1.84 billion is a lot of taxpayer money. But I, for one, can get more excited about the kind of investment A123Systems is talking about than about spending much more to bail out banks that still refuse to make loans. Large-scale manufacturing of the kind A123Systems is proposing is key to bringing the cost of lithium-ion batteries and alternative fuel vehicles down. And subsidizing that effort will not only stimulate job creation but also solidify the United States’ role in next-generation battery design and production.

—Jeff Moad, MA Executive Editor