General Motors' (GM) prototype Volt underscores the basic problem automakers have in developing new electric technology: The car is designed to run just 40 miles between charges of its lithium-ion battery pack.

That’s fine for zipping around town, but useless for many daily commutes - especially in the West. The US Department of Transportation says 23% of the nation’s commuters drive 42 or more miles roundtrip to work each day; another 10% drive 32 to 40 miles roundtrip. GM’s Volt just doesn’t meet their needs.

For years, nickel-cadmium batteries were the standard, but lithium-ion, commercialized by Sony (SNE) in the early 1990s, offers twice the “energy density” and is now the most promising battery for use in electric cars. Lithium-ion requires little maintenance, but needs a protective circuit to maintain safe operation by limiting peak voltage during charge and preventing the voltage from dropping too low on discharge.

So far, batteries are expensive and can’t match the range provided by a tank of stinky old gasoline. An off-the-shelf subcompact can go 300 to 350 miles between fill-ups.

Nevertheless, automakers believe battery-powered cars represent the future and are spending heavily on research and development. Nissan (NSANY) and Ford (F) are also active in the field. It’s a good bet that none of the new electric cars will qualify for the all-time worst cars in creation.

Hybrid gas-electric cars now represent the most cost-effective and efficient alternative to conventional cars. Toyota (TM) and Honda (HMC) offer immensely popular hybrids. The Toyota Prius relies on a nickel-hydride battery. Nissan now buys Toyota’s hybrid system and plans to develop its own technology by 2010.

GM is moving ahead with the all-electric car despite a sour economy and credit crunch that have pulled US auto sales down to 15-year lows.