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Auto sales are tanking and an auto industry recovery is many years away. Sales of hybrid vehicles have been crushed. However, the new Honda Insight and the 2010 Toyota Prius appear as if they could bring some recovery to hybrid sales, thanks to pricing competition.

Still, without a spike in gas prices, most Americans will continue to shy away from these fuel efficiency focused vehicles despite cheaper pricing. Thus, many, such as AutoNation CEO Mike Jackson, have called for a gas tax to help incentivize interest in fuel economy, while creating funding for fuel efficient tax credits.

With or without gas tax funding, it seems to me that a new tax credit should be created to incentivize the use of lithium batteries in conventional hybrids, thereby solidifying the use of lithium in the auto industry. Moreover, many of these hybrids can inevitably and quite easily be converted into plug-in hybrids as lithium costs are reduced – A123Sytems, an American battery company, has already proven this. So make a tax credit for that as well.

I know such an idea is heresy to many in the plug-in movement, whom believe it’s plug-in or nothing, but shell-shocked consumers, numerous consumer surveys, energy prices, etc. paint a different picture. Especially in these economic times, we need to walk before we run, and millions of lithium hybrid cars per year can be a huge step in the right direction.