Detroit's Big Three could get a $30 million helping hand from the federal government in their bid to develop a new generation of plug-in hybrid-electric vehicles.

In recent months, plug-ins have become one of the hottest new technologies in the auto industry, with automakers around the world racing to bring the hardware to market early in the next decade. Among the leaders in this pursuit are Toyota and General Motors, the latter showing off its Chevrolet Volt at the 2007 Detroit Auto Show.

Designed primarily for commuters, Volt would permit a motorist to go for about 40 miles purely on battery power. But it would overcome the primarily obstacle to earlier electric vehicles by also providing a small gasoline engine that automatically fires up during longer trips. That's why GM prefers to call the Volt an "extended-range electric vehicle."

Whatever they're called, the Department of Energy has set a goal of making the technology widely available by 2016 and intends the new grants to encourage development and subsequent pilot programs.

The announcement was made during a Washington seminar sponsored by Google and the Brooking Institution, which brought together an unusual mix of environmentalists, academics, politicians, and industry leaders, including Ford president Mark Fields.

The industry is hoping to receive even more government assistance. Leaders also warn that it is difficult to put a firm time frame on the rollout of new plug-ins, despite GM's goal of bringing Volt into production by 2010 and a Toyota entry soon afterward. The biggest problem is coming up with efficient, reliable, and relatively inexpensive lithium-ion batteries, speakers cautioned.

What began as little more than a technical curiosity has moved solidly into the mainstream. Toyota Motor Co. just sold its 1 millionth Prius, the world’s first mass-market hybrid-electric vehicle. Introduced in 1997 in Japan and two years later in the United States, the Prius is Toyota’s environmental flagship and easily the most recognizable “green machine” on the planet.

In its early days, Prius had little competition, initially only the Honda Insight, a teardrop-shaped two-seater that actually beat Toyota’s offering to the States, but never really charged up consumers. Today, Prius is being sold in more than 40 countries, and with gas prices surging to new records, almost by the day, it is also drawing a flood of new competitors. Toyota alone has added an assortment of gasoline-electric vehicles, including hybrid versions of the Camry sedan, and several of its Lexus luxury vehicles, such as the RX 400h crossover/SUV. By decade's end, Toyota hopes to be selling as many as 1 million hybrids annually, worldwide.

But manufacturers ranging from General Motors to Mercedes-Benz aren’t content to let the Japanese giant dominate the emerging hybrid segment. GM has been rolling out an assortment of its own hybrid offerings, ranging from so-called mild hybrids, or “mybrids,” like the Saturn Vue Green Line, to full-featured models, like the new Cadillac Escalade Hybrid. Ford Motor Co. was first in market with a gas-electric SUV, the Escape Hybrid. And Mercedes is working on several offerings of its own, possibly including a diesel-electric.

The big challenge is to take the technology to the next step – while also driving down costs. Diesel-electric systems could double the premium for hybrid technology. Advanced battery systems, notably new lithium-ion technology, could yield still better fuel economy, and GM is one of several manufacturers hoping to market a plug-in hybrid. Actually, the U.S. maker prefers the term “extended-range electric vehicle,” since its Chevrolet Volt will be able to run for up to 40 miles solely on battery power. But once it runs out of juice, Volt’s internal combustion engine will kick in, providing it the unlimited range of a gasoline-powered vehicle.

And as TheCarConnection reported several weeks ago, Nissan is now working on a pure electric vehicle that it hopes to launch in the U.S. in 2010, initially for fleet customers. Retail sales are set to begin in 2012.

But despite their ambitious plans, these manufacturers still have a lot of catching up to do. Prius was not only the first hybrid to hit market. It is now one of the most recognizable products in the automotive world, and that’s giving it a significant head start as Toyota aims to reach 2 million in sales.

Long seemingly invulnerable to the ups and downs of the American automotive market, Toyota is suddenly getting sheepish about future programs. For one thing, the Asian automaker will delay the opening of a new sport-utility vehicle plant it had hoped to open next year in Tupelo, Mississippi.

Meanwhile, production at the plant will be trimmed back to an initial 120,000 vehicles, rather than the annual output of 150,000 the automaker had originally planned, according to a Toyota spokesman. The company could expand production later, depending on demand, the official added.

The news comes only days after Toyota revealed that the ongoing slowdown in the U.S. new car market would almost certainly result in a decline in global profits – the first time that’s happened in nine years. As a result, Toyota is looking at ways to shift its resources to emerging markets, such as China, India, and Russia, which it needs to help prop up its sales and balance sheet.

As it now stands, Toyota is anticipating a 27 percent drop in profitability, to 1.25 trillion yen, or $12 billion – a number that other manufacturers still can only envy. Its Japanese competitor, Honda, has also predicted declining earnings of 18 percent. And archrival General Motors recently reported massive losses, largely due to the downturn in the American market.

Toyota had been counting on steady gains in the States to help it surge past GM in the global sales sweepstakes. The U.S. carmaker eked out a narrow victory in 2007, but Toyota nudged past it during the first quarter of 2008.

Toyota’s plans for the Tupelo plant – which was to build a replacement for the Highlander, an SUV/crossover – reflect a variety of factors, starting with the broad downturn in overall U.S. sales, which are expected to dip by as many as 1 million vehicles in 2008. Making matters more challenging, Toyota isn’t the only manufacturer adding capacity in North America, where there is already enough factory space to produce about 17.4 million cars, trucks, and crossovers annually – but only estimated demand for about 14 million. Honda is adding a plant, as is Kia, the downmarket brand owned by Hyundai Motor Co. And other makers, such as BMW, are expanding existing operations.

If there’s a positive side, some makers are looking to North American facilities as a way to cope with the weakened U.S. dollar. BMW, for example, is expected to replace some of its current German imports with the expanded output of its Spartanburg, South Carolina, plant.

Toyota isn’t the only maker shifting resources out of North America, long the world auto industry’s prime profit center. BMW announced, recently, that it would divert product previously earmarked for the States. And even GM is considering where to focus itself. Not many years ago, North America accounted for 75 percent of the automaker’s business. Today, that’s down to around 50 percent and, said Vice Chairman Bob Lutz, that could soon drop to just 25 percent, as demand increases in booming outlets like China, Russia, India, and other emerging markets.

Inside sources have provided rock-solid confirmation that the Nissan GT-R we photographed as it was unloaded at a Nürburgring workshop is definitely the lightweight Spec V version. The prototype of the 2010 Nissan GT-R Spec V has now hit the 'Ring itself for some initial laps, providing us a better look at the baddest version of the car many call Godzilla. (Gojira, if you’re a stickler for the accuracy of the original.)

The flat-black look of the carbon fiber rear wing is now more apparent, and revised front splitter is also better captured in our latest photos.

Due to market a year from now, the 2010 Nissan GT-R Spec V itself should generate some serious G-forces, what with its out-of-the-box 473 horsepower.

With the appearance of an actual production-spec prototype hitting the scene, rumors about the Spec V's increased power have begun rumbling throughout the media. Numbers between 550 and 600 horsepower are now floating around, which would clearly mean for some insane performance potential for what is already a Supercar-caliber ride. --Glenn Paulina with Paul A. Eisenstein

“We know we have a perception problem, at GM,” admits Bob Boniface, the former Chrysler stylist who is not overseeing design of the 2010 Chevrolet Volt. Where environmentally-conscious consumers look at Toyota and see “Prius.” They look at GM and see “Hummer,” says Boniface, adding that this perception gap
is something we have to fix.”

There are plenty of skeptics who wonder whether Volt is simply smoke and mirrors, a high-minded project designed to turn around GM’s image, then fade away. And in years past, these doubters might have been right. Over the years, the automaker has showcased a lot of grand projects that failed to reach production. Others have hit market looking little like the original concept – witness the abortive Pontiac Aztek.

But all signs indicate GM is as serious as a heart attack, as the old line goes, about Volt. It has assigned hundreds of designers and engineers to the project. Operations are spread out across the sprawling Tech Center, in the Detroit suburb of Warren, with additional work being done in facilities as far afield as the GM Proving Grounds, in Wixom, Michigan, and Mainz-Kastel, Germany.

The biggest challenge is coming up with a lithium-ion battery that is robust enough to endure the conditions the typical car will face over its lifecycle, wet, bone-dry, burning hot and freezing cold. LIon technology normally likes “the same conditions we humans do,” notes program czar Tony Posawatz, about 70 degrees Fahrenheit, with modest humidity.

As yesterday’s report noted, two battery suppliers have been brought onboard, CPI and A123. The latter vendor’s lithium-ion technology is already in widespread use in handheld tools, and according to Posawatz, is so benign that you can drive a nail into one of the cells and it will barely spark. Compared that to some of the other LIon technology on the market, which is so volatile the Federal Aviation Administration has limited the number of batteries you can now bring aboard an airplane.

While GM is still in the midst of a crash, two-year program to ensure CPI and A123 batteries will work, the automaker was confident enough, early on, to approve the Volt for production. If the U.S. automaker can hold to schedule, it will get as much as a year or more of a jump on its arch-rival Toyota, which is working fast on a plug-in version of the popular Prius hybrid.

There’s no question Prius has been a game-changer, proving that there really is a market for hybrid-electric vehicles, despite a gap between projected and real-world fuel savings. Prius is today the world’s most popular HEV, and clearly an image boost for Toyota, more than offsetting any hit it might take for its concurrent push into the large pickup and SUV markets.

But while Prius may save gasoline, Volt could obviate the need to fill up more than every few months. GM’s target is to deliver 40 miles of battery-only range, with speeds up to a software-limited 100 mph and 0-60 times of around 8.5 seconds.

During an appearance at the Detroit Auto Show, last January, Toyota CEO Katsuaki Watanabe indicated there are still some serious details to work out about the plug-in version of Prius. Performance and top speed will be lower than Chevy’s, while range will likely be about half of Volt’s, according to Toyota sources.

Part of the problem is that Toyota bet its marbles on the wrong battery technology, according to a wide range of industry insiders. “Not all lithium technology is the same,” explains Andy Farah, Volt’s chief engineer. A variety of different chemistries are being tested. Some offer extremely low volatility, but don’t deliver much power. Toyota and its battery partner, Panasonic, bet on a “cobalt-doped” version of lithium that is high-power, but also extremely sensitive to the slightest manufacturing flaw – too sensitive, it turns out for today’s mass production methods. So it was nearly back to ground zero, TheCarConnection.com has learned, which means Toyota is suddenly in the unhappy position of chasing GM.

Of course, that first-mover advantage could vanish in a hurry, both Posawatz and Farah agree, if GM doesn’t get Volt right, and right from the start. Quality problems, recalls, range shortfalls, all could turn this public image windfall into a PR nightmare.

Even if GM gets it right, the question is how long it will be able to maintain its lead. True, Toyota makes mistakes, but not often, and not for long, concedes a senior GM executive, asking not to be quoted by name.

An aborted launch would give Toyota a chance to debut its Prius plug-in, and other competitors are on the way. Manufacturers from Mercedes-Benz to Hyundai are working with lithium-ion technology, and many of them are working on plug-ins of their own.

So, each day, as work begins anew on the Volt project, the GM team knows it has just one shot at getting this one right.