"We're creating an industry that doesn't exist," said Byron McCormick, head of GM's fuel cell development and commercialization. "Now we've got to start saying if I want to make hundreds or thousands or millions of these things, what are the implications of these choices. How do the materials degrade."

McCormick said that GM, which is spending hundreds of millions of dollars annually on fuel cell research, expects to have market-ready fuel cells by mid-decade, with the first applications outside the automotive industry.

GM agreed last fall in a deal with Nextel Communications Inc. to install fuel cell backup-power units on cellular phone towers in California, to test their durability in harsh conditions.

But McCormick said that GM is also eyeing fuel cells in "non-traditional" transportation devices. Analysts said that that could include include transport trucks, lawn mowers, farming equipment and other uses. Because fuel cell stacks are scalable, they can be enlarged or shrunk to fit a variety of applications, depending upon the energy needs.

The first fuel cell-powered GM cars and trucks for the retail market are not expected to arrive until about 2010, McCormick said.

Fuel cells use an electrochemical process to create electricity by mixing hydrogen and oxygen, with distilled water as the only byproduct, avoiding the greenhouse gases and smog-forming pollutants that internal-combustion engines emit.

The auto industry, under pressure from environmentalists and regulatory authorities to improve fuel economy and reduce pollution, sees fuel cells as the answer to its problems.

The new fuel cell research facility will employ about 50 to 100 people, McCormick said, raising the number of workers GM has focusing on the burgeoning industry to about 600.

"I think that they're laying the groundwork in place to compete very heavily," in a hydrogen-based economy, said Lisa Callahan Novaczyk, an analyst with Think Equity Partners.

GM unveiled its vision of a future mass-market fuel cell vehicle, called the Autonomy, at the Detroit auto show in January. The Autonomy's fuel cell powered four small electric motors located at each wheel. Because everything was controlled electronically, the driver and passenger could be placed anywhere in the vehicle. Few moving parts ensure a longer life for the fuel cell vehicle, GM said.

"It wasn't that long ago that people said that what we're going to show couldn't be done," McCormick said. "Now we're going to see how far we can push the technology and can we really make it so it will make it into a production automobile."

A key part of creating a large-scale operation to manufacture fuel cells will be working with suppliers, so they know what materials to use and which parts of the fuel cell stack or fuel reformer they should work on.