Batteries Still Not Included?

The Washington Post sounds a skeptical note amid the fanfare on the President's new electric car battery initiative:

Even advocates of federal support for the industry express grave doubts about expanding battery production capacity so far ahead of the demand, at the expense of other investments. Estimating that by 2015 the U.S. share of the world market will be no more than 10 percent, Anderman suggested that the United States delay efforts to broaden capacity and use the money for pilot projects and research instead.

The result: a firestorm of over 400 often passionate comments pro and con, as happened earlier this year when the Boston Consulting Group released a discouraging report.
The Federal role in dramatic innovation has sometimes been undeniable. Take the industrial production of penicillin during the Second World War, the twentieth century's most rapid technological miracle, despite all of the complications of later overuse of antibiotics. Penicillin had been discovered in England in 1928, yet over a decade of attempts to make medically useful quantities had failed. The U.S. Agricultural Research Service site tells the story of the British scientists Howard Florey and Norman Heatley's mission in summer 1941, bringing a sample of the mold to the U.S.:

Arriving in the United States, they were directed to USDA's Northern Laboratory, now a component of today's Agricultural Research Service, in Peoria, Illinois. The scientists in Peoria immediately rolled up their sleeves and started their cultures of penicillium. By November 26, 1941 (just days before Pearl Harbor), Andrew J. Moyer, the lab's expert on the nutrition of molds, had succeeded, with the assistance of Dr. Heatley, in increasing the previous yields of penicillin 10 times.

The secret was corn steep liquor, familiar to agricultural researchers as a byproduct of the wet corn-milling process but obscure to medical researchers of the day. By including this nutrient-rich liquor in the culture medium, Dr. Moyer found a better growth medium than anything tried in England.

Dissatisfied still, he added milk sugar to the medium, and again the Penicillium mold doubled. Moyer also figured out how to use deep vats to grow the cultures. So encouraging were the results that four U.S. drug companies agreed to attempt large-scale production of penicillin. Nevertheless, by March 1942, they'd only produced enough of the drug to treat a single case.

Then the Peoria researchers made yet another breakthrough. Searching for a superior strain of Penicillium, they found it on a moldy cantaloupe in a Peoria garbage can. When the new strain was made available to drug companies, production skyrocketed.
As this account suggests, the breakthrough occurred not because the researchers were government rather than private industry scientists, but because they worked in a different branch of biology and could see the problem in a new light. And their advances would have been insufficient to meet demand without the further ingenuity of the private chemical industry.
The problem of government support is that it tends to reach established players who might be perfectly competent but unaware of, or skeptical about, outsider ideas that could pay off with enough work. That's why dry photocopying was developed not by Kodak but by a second- or third-tier Rochester neighbor, Haloid, and an obscure patent researcher, producing the Xerox 914 fifty years ago despite the doubts of prestigious consultants about the market.
To me the most telling example goes back to the late nineteenth century, when the War Department and the Smithsonian Institution spent the equivalent of over a million dollars on the aviation experiments of the astronomer Samuel P. Langley. The Smithsonian itself has long acknowledged the priority of the Wright Brothers and disowned earlier Smithsonian officials' experiments intended to vindicate Langley's design. While also helped by the Smithsonian -- with information, not grants -- the self-educated and self-financed Wrights benefited from their isolation from conventional aeronautics and by their familiarity with the physics and engineering of bicycle control. According to the Smithsonian curator and Wright biographer Tom Crouch: "From the beginning to the end, from 1899 to the end of the 1903 flying season, they probably spent less than $1,000, while Langley spent about $50,000 during that period. They flew; he didn't."
Transportation revolutions usually arise outside their respective industries. Malcolm McLean was not a big shipowner or -builder but a trucker who had founded his company hauling used tobacco barrels during the depression. Yet he was largely responsible for the container ship revolution with its transformation of the world economy.
What we need is not more plants for existing battery technology but better methods for recognizing innovations that (like the original Xerox copier) may appear to hit brick walls but through perseverance can find their way over or around them.