What does that mean for the American players? O'Neill said those whose whole business is batteries -- such as A123 and Ener1, which also got a Recovery Act grant for manufacturing -- are most vulnerable to Asian competition. More diversified companies, such as Milwaukee-based Johnson Controls, may survive if the battery business comes up short.
"By the time the [U.S.] market really emerges, the Chinese will have been able to make product that's so much cheaper ... I'm not sure it's going to matter," O'Neill said.
In the fuller version of this "train wreck" scenario, some market observers believe, Asian firms gain a decisive edge. They already have working plants in Asia, so if demand perks up there as expected, they may advance down the cost curve quicker than U.S. companies awaiting U.S. buyers.
At some point, the cost advantage may widen enough that Asian firms can flush American ones out of their U.S. factories. American demand for electric cars may never match all the factories that are rising in the Midwest. In that case, they'll sit unused.
They'd probably continue most of their R&D in Asia, and they'd be able to sell licenses to American companies wanting to use their battery technology. But at least for the Midwestern manufacturing jobs, they'd have to hire Americans.
Can A123 avoid this "train wreck"? One strategy is to join other companies surfing the Chinese wave. Like many foreign battery companies, A123 has a joint venture that gives it access to Chinese factories, and thus the Chinese market. If A123 could combine Chinese earnings with a major car contract in the United States, that would likely satisfy investors in the short term, and A123's domestic factories could stay open.
Gas prices are another variable -- one that affects the U.S. market more than elsewhere. Historically, low gas prices have pushed Americans toward large, fuel-inefficient cars; price spikes tend to suddenly, and temporarily, boost sales of fuel-efficient models.
Bloomberg New Energy Finance, a research firm, has modeled how different gas prices would affect electric cars. Say American gas prices reach about $3.70 a gallon, adjusted for inflation, in 2030; that's the baseline forecast by the Energy Information Administration. In that case, about 1 in 5 new cars would be either a "pure" electric or a plug-in hybrid like the Volt, according to BNEF Senior Transportation Analyst Glen Walker.
Xavier Mosquet, worldwide leader of Boston Consulting Group's auto practice, said for companies that lost the auto manufacturers' first bids, there's another way to stay alive: Have a better technology.
Who will survive the market 'shakeout'?
"The two ways to win in the business will be either to sign the early electric car manufacturers ... or you will have to have a significantly better chemistry or technology that will give you an edge for the next generation of contracts," he said.
Mosquet expects that next generation to start in 2014 or 2015, with contracts getting signed as early as late 2012; he predicts a "shakeout" of companies that have neither large contracts nor new technology.
A123's lithium-ion technology, originally developed at the Massachusetts Institute of Technology, is considered among the best in the business on weight, performance and quality. On a per-kWh basis, it costs more than some other lithium-ion technologies, but A123's Forcier said it performs better than the one in the first-generation Volt -- LG Chem's -- and that it can do more with less space.
A123 is also contributing to two game-changing research projects funded by DOE. These projects last three years; when they wrap up in 2014, A123 may have first access to technologies vastly superior to what's in the market.
But there's no telling how much progress LG Chem, or other battery makers around the world, will also have made by then. And Micky Bly of General Motors made clear that the supplier's nation of origin doesn't matter; only the battery does.