The grants, which also cover the manufacture of batteries and components, represent "the largest investment in this kind of technology in American history," he said.

Innovation urged

"I don't want to have to import a hybrid truck, I want to build a hybrid truck here. I don't want to have to import a windmill from someplace else, I want to build a windmill right here in Indiana"

Barack Obama, US president

The package is part of a $787bn economic stimulus plan agreed by congress, which critics have said is doing little to kickstart the economy.

Defending the multi-billion package, Obama said that the best way to rebuild a sustainable economy is by encouraging businesses across the US to be innovative and win orders from across the world.
 
"I don't want to have to import a hybrid car, I want to build a hybrid car here," he said.

"I don't want to have to import a hybrid truck, I want to build a hybrid truck here. I don't want to have to import a windmill from someplace else, I want to build a windmill right here in Indiana."

The grants that Obama announced on Wednesday will be distributed across nearly 50 projects in 25 states.

Economic challenge

The largest amount of grant money will be received by businesses in Indiana and Michigan, the heartland of the US vehicle industry.

Figures released last week by the US department of commerce showed that the US economy shrank a slower rate in the second quarter of 2009, fuelling hopes that the economy will soon begin growing again.

However, the US unemployment rate hit 9.5 per cent in June – its highest level in 26 years – and some analysts say that the rate could enter double digits before it begins to fall.

The Insititute for Supply Management said on Wednesday that the US services sector, which includes retailers, financial services, transportation and health care, contracted for the 10th straight month as consumers continue to rein in spending.

Obama’s approval rating on his handling of the economy has shrunk from 58 per cent in April to 50 per cent, according to an Associated Press-GfK opinion poll.