McCain said such a device should deliver power at 30 percent of current costs and have "the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars."
The Arizona senator is also proposing stiffer fines for automakers who skirt existing fuel-efficiency standards, as well as incentives to increase use of domestic and foreign alcohol-based fuels such as ethanol.
In addition, a so-called Clean Car Challenge would provide U.S. automakers with a $5,000 tax credit for every zero-carbon emissions car they develop and sell.
"In the quest for alternatives to oil, our government has thrown around enough money subsidizing special interests and excusing failure," said excerpts from McCain's prepared text. "From now on, we will encourage heroic efforts in engineering, and we will reward the greatest success."
The proposal comes as gasoline has reached a record cost over $4 a gallon. That has boosted the price of virtually all goods and services, sent commuters flocking to public transportation and increased tensions between the United States and its Middle Eastern oil suppliers.
Last week McCain suggested one way to ease supply concerns would be to lift a federal ban on offshore oil drilling if individual states want to allow it. His Democratic rival, Sen. Barack Obama of Illinois, opposes that idea, saying it would do nothing to address immediate price concerns.
On Sunday, Obama told a Washington audience he would strengthen government oversight of energy traders whose futures speculation he blames in large part for the skyrocketing price of oil.
In his latest speech, McCain expressed exasperation both with the federal government and the private sector. He said rising costs during a time of stagnant wages evokes the 1970s era of "stagflation."
Without blaming his fellow Republicans in the Bush administration directly, McCain said: "It feels the same today, because the unwise policies of our government have left America's energy future in the control of others."
The pork-barrel opponent also blasted "a hodgepodge of incentives" for the purchase of fuel-efficient cars.
"Different hybrids and natural-gas cars carry different incentives, ranging from a few hundreds dollars to four grand. They're the handiwork of lobbyists, with all the inconsistency and irrationality that involves," McCain said.
Training his sights on Detroit, the senator noted Brazil went from about 5 percent to over 70 percent flex-fuel capability in its vehicles in just three years. At the same time, U.S. automakers -- who helped with Brazil's shift -- say it will take them longer just to reach a 50 percent goal.
"Whether it takes a meeting with automakers during my first month in office, or my signature on an act of Congress, we will meet the goal of a swift conversion of American vehicles away from oil," McCain said in his remarks.