PLUG-IN HYBRIDS: Chevy has joined the race to get plug-in vehicles on the road with its long-awaited Volt.
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When President George W. Bush was in the White House, he hyped hydrogen as the future of the automobile industry. But with President Obama now on the job, the next major step for the nation's cars and trucks comes with a plug.

Obama laid out the goal of putting 1 million electric cars on the road by 2015 during the summer of 2008, as he campaigned for the presidency. It was ambitious then but may prove even more difficult now that a slumping economy has brought two of Detroit's Big Three automakers into bankruptcy court and dragged new car and truck sales to under 10 million a year—well below the high-water mark of roughly 17 million in 2005.

Obama has vowed to keep the government from using its newfound ownership stakes in General Motors Corp. and Chrysler Group, LLC, to decide what makes and models roll off the assembly lines of the two iconic carmakers. But while Obama and his auto task force won't be calling the shots in the board room, their preference for plug-ins has been made clear.

New industry-wide fuel economy and emission standards will go into effect for model year 2012. That is two years after GM plans to roll out its much-hyped Chevy Volt, an extended-range plug-in hybrid capable of running 40 miles without tapping into its gas tank but almost a decade before many experts believe hydrogen cars will make it to the market.

The $787 billion stimulus package that Obama signed into law earlier this year provided $2.4 billion for the development of plug-ins and the advanced batteries they rely on for power. The government is also offering tax credits up to $7,500 for the purchase of plug-in cars and trucks, and more plug-in aid could be on the way as part of sweeping climate and energy legislation that congressional Democrats hope to move this year.

Hydrogen halted

Automakers, which have long urged the government to avoid picking winners and losers among emerging technologies, certainly welcome the increased funding. But they have recently started a quiet revolt over the Energy Department's decision to slash federal funding for hydrogen tech, which was touted by Bush in his 2003 State of the Union address.

Not only does Obama's budget request propose slashing the federal funding for hydrogen cars by $100 million—a 60 percent reduction—but it also has proved to be a harbinger for DOE's decision on how to divvy up $25 billion in Section 136 loans, which will help carmakers and parts suppliers retool to produce more fuel-efficient cars and trucks.

Energy Secretary Steven Chu, who has final say over which companies and projects get the federal cash, has cited a suite of barriers to hydrogen car deployment in his decision to idle the vehicles program. "We asked ourselves, 'Is it likely in the next 10 or 15, 20 years that we will covert to a hydrogen car economy?' The answer, we felt, was 'no,'" Chu said recently.

DOE announced the first round of winners for the government-backed loans last month, handing out $8 billion to Ford Motor Co., Nissan North America and Tesla Motors Inc. to finance improvements to electric vehicles, batteries and even traditional internal combustion engines. None of the loan money was slated for hydrogen projects.

With hydrogen falling to the wayside, at least for the foreseeable future, the industry has lined up with Obama's vision of a plug-in future. In addition to GM's plunge into plug-ins, almost every other major automakers has announced plans to develop plug-in hybrids or all-electric cars. Toyota Motor Corp. will produce a few hundred plug-in Prius hybrids later this year as a test fleet, and Nissan is planning to sell an all-electric car next year.

"Even as our American automakers are undergoing some painful adjustments, they are also retooling and reimagining themselves into an industry that can compete and win," Obama said in Pomona, Calif., earlier this year.