WASHINGTON The Energy Department is getting ready to hand out about $2 billion in grants to create a domestic industry for electric-car batteries, and 122 companies are scrambling to get pieces.

The companies range from small niche firms to giants such as Dow Chemical and Johnson Controls. All are promising a combination of innovation and ability to deliver new products on a commercial scale to keep the U.S. from being dependent on foreign oil or foreign-made batteries.

Weve had 20 years of bad behavior in the United States in terms of developing ideas into products, said Mary Ann Wright, chief executive of Johnson Controls joint venture developing hybrid battery systems.

Now, policymakers hope that helping domestic battery manufacturers will produce economic savings that often come with large-scale production and are needed to make electric cars affordable. With funds provided by the stimulus bill in February, the Energy Department can cover up to half the cost of a battery-related project.

The effort has its skeptics. Grants are expected to focus on lightweight lithium-ion batteries similar to those found in laptops. They are the newest thing in a business that had not changed much since lead-acid batteries were invented a century and a half ago.

But U.S. hopefuls face stiff competition from foreign firms such as Japans Panasonic and Sony and South Koreas LG Chem, which already dominate the lithium-ion battery market in power tools, laptops and cell phones. Some domestic firms have recruited foreign companies as partners in new U.S.-based manufacturing facilities.

Some industry experts note that lithium-ion batteries may not be ready for tough road conditions, that they generate a lot of heat and that there is no infrastructure for recycling them.

Nonetheless, President Barack Obama has set a goal of having 1 million electric cars on the road by 2015, and the Energy Department is trying to make sure a large share of them are powered by U.S.-made batteries.

In addition to the $2 billion in grants it is expected to announce soon, the Energy Department can also lend from a separate $25 billion program. It has already announced a $1.6 billion loan to help Nissan develop an electric car, including the construction of a new battery plant, and a $465 million loan for Tesla Motors, part of which would go to a battery-pack facility.