Alternatives to McCain's battery prize

I don't like McCain's proposal for the Feds to offer a prize for a better battery.

From his campaign page:

John McCain Will Propose A $300
Million Prize To Improve Battery Technology For Full Commercial
Development Of Plug-In Hybrid And Fully Electric Automobiles. A
$300 million prize should be awarded for the development of a battery
package that has the size, capacity, cost and power to leapfrog the
commercially available plug-in hybrids or electric cars. That battery
should deliver a power source at 30 percent of the current costs. At
$300 million, the prize is one dollar for every man, woman and child in
this country - and a small price to pay for breaking our dependence on
oil. 

My problem is not with government funding of research, nor with the emphasis on applied research, nor on the use of prizes to motivate entrepreneurs. I simply think that he chose a terrible goal for this prize. My criticism is twofold:

1.  I think that the market is already providing sufficient incentive for the development of these batteries.There is massive demand for improved batteries for portable electronic devices of all types. Even in the automotive world, there is plenty of effort being made to improve batteries for cars. We have hybrid cars and hybrid buses, while domestic and foreign engineers are developing all electric vehicles (Tesla in the USA, and the Israeli government ). Furthermore, any incentive to buy/produce low-emission vehicles will support this market.
2. I think that the goal is too narrow, and rather arbitrary. Prizes have traditionally been used to jumpstart radically new fields, asking designers to achieve a broad, qualitatively different goal by any means at their disposal. Instead, this prize asks for an incremental increase on existing technologies, and focuses on a very specific application (electric cars). I noticed that "cost" is one of the components of this prize: I think that's a very bad idea because I don't think that the cost of a single system designed to win a prize will tell us very much about the cost of mass production. 

I don't think that McCain's project could accomplish much that couldn't be accomplished by supporting the solar challenge . However, the SC allows engineers to achieve their goal by a variety of means, rather than focusing on one narrow technology (battery improvement). Furthermore, his solution just reinforces the idea that our transportation system needs to depend on personal automobiles, rather than considering a system that relies on a combination of public transit, bikes, walking, and shared cars .

Okay, here's the fun part. What would be a better prize?

Here are my first suggestions:

1. Fusion energy : We've achieved laboratory fusion, but no system produces more energy than it consumes. Funding for fusion research is locked into a "big project" mode (and the US has bailed out on this project ), yet some engineers claim that a workable fusion system could be produced on a small scale . Federal funding may have failed here: use the prize to stimulate other approaches to research. 
2. Safe fission reactor: Design a reactor that cannot meltdown, and does not produce waste that is any more dangerous than the current reactor fuel.
3. Solar power satellite : Deploy a satellite that can collect energy in orbit and safely transmit large amounts of energy to a receiver that can be placed near consumption.

All of these seek innovations that provide a general good (energy production) in a radical manner, and allow the innovators to chose from a large number of strategies.

Any other ideas?

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"You have seen how a man was made a slave; you shall see how a slave was made a man." --Frederick Douglas