As his administration offered more aid to stabilize the ailing U.S. auto sector, President Barack Obama touted a $2.4-billion grant program to spark the development of plug-in hybrid cars.

"Show us that your idea or your company is best-suited to meet America's challenges, and we will give you a chance to prove it," Obama told workers Thursday at the Edison Electric Vehicle Technical Center in Pomona, Calif.

The president toured the facility as part of a two-day swing through the Golden State designed to sell the public on his budget plans and to spotlight early results of the $787-billion economic recovery package. Later Thursday, Obama will participate in a town hall meeting in Los Angeles and appear on NBC's "Tonight Show with Jay Leno."

In Pomona, Obama's short address to workers focused on the administration's effort to lessen the U.S.'s dependence on oil.

"We have a choice to make," Obama said. "We can remain one of the world's leading importers of foreign oil, or we can make the investments that will allow us to become the world's leading exporter of renewable energy."

Obama's goal is to have one million plug-in hybrid vehicles on the road by 2015.

The grants Obama unveiled Thursday will be funded by the stimulus package. The majority of the grants - $1.5 billion - will go to manufacturers producing advanced batteries used in plug-in hybrids. Up to $500 million will go to makers of other components for electric vehicles, such as motors, while $400 million will be used to demonstrate plug-in hybrids and other electric infrastructure concepts.

The White House expects the projects to create tens of thousands of jobs.

The president's push for new vehicle technology comes as the U.S. auto sector battles a severe sales slump prompted by the recession. The Treasury Department is weighing requests by General Motors Corp. (GM) and Chrysler LLC for more government loans.

Earlier, the Treasury launched a $5 billion program to assist struggling auto-parts suppliers, many of which are on the verge of bankruptcy.

Obama said his $3.6 trillion budget makes investments that will move the U.S. toward energy independence, confront climate change and create jobs. Republicans and some moderate Democrats have balked at the scope of the president's plans, however, and skepticism is likely to mount further if the Congressional Budget Office's soon-to-be-released budget projections are as bleak as anticipated.

Obama pledged to invest $15 billion dollars a year in wind and solar power, biofuels, clean coal and American-made fuel-efficient vehicles. He said the government is investing $11 billion to upgrade the power grid so it can carry renewable energy.

California, a state hard hit by the recession, is on the cutting edge of energy technology, Obama said, pointing to the "green freeway" the state is planning with Washington and Oregon. If completed, the freeway would feature rest stops that let drivers charge their vehicles or refuel them with hydrogen or biofuels.

"These are challenging times, but we know we can do this," Obama said. "It won't come without cost, nor will it be easy. We've got 240 million cars already on the road. We've got to upgrade the world's largest energy grid while it's already in use. And other countries aren't standing around and waiting for us; they are forging ahead with their own bold energy plans."

-By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256; henry.pulizzi@dowjones.com