I'm not sure what the U.S. taxpayers will make of the $700 million cost of developing the Chevrolet Volt, now that they own and control General Motors. But engineering breakthroughs don't come cheap and GM has committed three times its usual budget for a platform variant to make the Volt a production reality.

The potential prize, of course, is huge. GM now has the chance to become a technology leader in a way that it hasn't managed since the 1950s, when it pioneered automatic transmissions and power steering. Given the environmental challenges facing today's car industry, if the Volt helps makes the electric car an everyday proposition, history will probably record it as an achievement to eclipse many others.

All this is happening at breakneck speed. GM has been working on the Volt for just four years, after the basic concept was sketched out by product planning chief John Lauckner in a 10-minute meeting with vice-chairman Bob Lutz using his fountain pen on a scruffy sheet of paper.

The driving force then, as now, is to wrest technological leadership from Toyota and its Prius hybrid. Skirmishes in that battle are playing out already and, months before the Volt is launched, the two have clashed in Washington over the calculation of the Volt's official fuel consumption figures.

No doubt the Volt is more than just a car to GM: it's also a corporate rallying call. Lutz says the development has absorbed about twice the manpower of a normal car program, expenditure justified because it will spawn a family of electric cars, including the inevitable seven-seat SUV.

Yet the essentials of the Volt are quite simple: slot a powerful battery and 111kW/150hp electric motor into a family-sized hatch that's already configured to take an internal combustion engine and use the 1.4-liter Family Zero donkey solely for electric drive.

A simple concept, maybe, but the practical engineering to execute the idea is anything but. To accommodate the 16kWh lithium ion battery pack, a large section of the Chevy Cruze platform's central body structure has been cut away and replaced by a broader, deeper tunnel into which the T-shaped battery fits, also extending under the rear seats. That's why the Volt has only two back seats. To stiffen the structure, there's a new cross-car beam threaded through a notch in the battery pack.

Getting that battery right has been the main engineering challenge. It weighs 397lbs and consists of 200 crisp-bag-sized cells wired into a homogenous, reliable unit, a task that has absorbed GM's best technical brains. Problems have included short-circuits that overheat cells, in the worst case putting them out of action, so the battery controller is tuned to isolate misbehaving cells before they suffer permanent damage.

Heat is the great enemy of lithium ion batteries, so the Volt battery pack is cooled by its own water system feeding into its own radiator in the nose. In fact, managing the heat generated by the power system has been the second most difficult challenge after the battery pack, according to chief engineer Andrew Farah.

So, nestling behind the Volt's sleek nose is a huge cooling pod with four radiators and two fans. There's an oil-based system for the 55kW electrical generator that replenishes the battery and a water-based system to keep the suitcase-sized electrical controller cool.

Not that you'd notice this complexity from behind the wheel. The interior is conventional, with familiar stalks and minor switches from the GM parts bin. And even though this pre-production prototype has an ugly lump of glue oozing between ill-fitting upper and lower sections, it otherwise looks and feels ready for your driveway. Facing the driver is a TFT-screen instrument panel and a center console with touch-sensitive switches for air conditioning, entertainment and navigation. Although it lacks the cool execution of the Prius, the materials are more colorful and friendly.

Cabin space is disappointing, though. The front is fine but rear head room is compromised by the aerodynamic roof profile and the higher rear seat cushion, which has been raised to accommodate the battery. Whereas the Prius can serve as a family car, the Volt is more of an occasional four-seater.

The start-up process is simple: ignition on and press a dashboard-mounted starter. The digital instrument panel glows into life, accompanied by a gentle bing, just like a PC. Otherwise, there's no noise because, on this test, the battery has more than half its charge and the gasoline engine isn't running.

Drive is selected with a PRND shifter, mounted in a recess in the central console. The shifter is disappointingly obstructive, but wiggle it back into D, squeeze the accelerator and the Volt glides steathily forward. Speed builds smoothly and progressively at a rate similar to a modest 130hp diesel, with the added benefit of no gear steps to interrupt progress. To raise performance, there's a Sport button on the dashboard, which increases power by 20 percent. The performance boost is noticeable, more like a 150hp diesel, but it'll drain the batteries more quickly.The absence of engine noise stands out, emphasizing the road roar from the low-resistance Goodyear Fuel Max tires and bump-thump from the suspension. Chevrolet is working on quieter bushings.

With conventional strut and torsion beam suspension from the Chevy Cruze/Vauxhall Astra, the Volt doesn't break new dynamic ground, particularly since the chassis tuning mimics the comfort settings of the Cruze. The electric power steering is linear and faithful to the helm, but there's body roll in corners and the general feeling of a car focused on cruising rather than pace.

Braking effort can be enhanced electrically, too, using a regenerative setting on the shifter, which is engaged by pulling the lever back another notch to the position normally occupied by the Sport setting on an automatic gearbox. Chevrolet calls this low range. It cranks up the braking effect from the electric motor when you lift off and feeds more energy into the battery. The extra braking effect is noticeable and Chevrolet suggests using it in town to take advantage of stop-start driving. Out on the open road, the extra drag effect might be too intrusive when all you need is to coast gently.

Regenerative braking is important in the Volt. It can increase efficiency by 25 percent and, to make it work, the brakes are fly by wire, which allows GM to coordinate the mechanical and electrical braking efforts.

There's one major aspect of the Volt that we can't yet comment on: the real-world range and how the range-extender gas engine interacts with the electric motor. Gauging economy was impossible, too, although the tripmeter read an impressive 963mpg at the end of our test.

What we now know about the Volt, though, is that it looks great inside and out, is refined and comfortable (although with a smallish cabin), appears to offer great economy and drives like a proper car – not something that can be said about some electric vehicles we've sampled.

We may not know exactly how the battery behaves in real-world conditions and driving cycles, but the Volt appears to deliver on its promises. That $700 million looks to have been spent pretty well.

Julian Rendell/Autocar