Battery maker Valence Technology Inc. is applying for a $225 million federal grant to build a plant in Leander, Texas to make battery packs for electric vehicles, the firm announced last week.

The company is asking for funds from the U.S. Department of Energy's Electric Drive Vehicle Battery and Component Manufacturing Initiative, a part of the government’s economic stimulus package. If approved, Austin, Texas-based Valence Technology says the facility would begin operations in August 2012.

Valence Technology estimates 660,000 lithium iron magnesium phosphate battery packs would be produced annually in the facility. The company says it would create up to 2,700 new high-tech jobs by 2012 and up to 4,000 by 2016.

Our recent grant proposal includes an aggressive construction plan for manufacturing capacity that exceeds the Department of Energy specifications, said in a statement Ross Goolsby, Valence Chief Financial Officer. We can put this manufacturing plant online in the U.S. and begin production quickly.”

The company plans to fund the remaining $359.4 million (61.5 percent of the total project costs) through state and local tax and other incentives.

In the last couple of months several battery companies announced strategies to expand battery production in the country. On May 6, EnerDel launched a lithium-ion battery plant for hybrid, plug-in hybrid and pure electric vehicles in Indianapolis, Indiana. Enerdel touted the factory as the first plant in the U.S. with commercial-scale capacity production of the batteries to date.

Later, General Electric announced it was investing $100 million in the high-tech batteries business and was seeking funds to build a plant to manufacture these battery packs for its hybrid locomotive.

Yesterday, Westborough, Mass-based Boston Power said it was seeking a $100 million loan from the DOE Electric Drive Vehicle Battery and Component Manufacturing program to build a lithium-ion batteries facility in Auburn, Massachusetts for Plug-in Hybrid and electric battery vehicles.

Funds available under this program total $2 billion.