Published March 10.


The Ford Motor Company will license hybrid technology from the Toyota Motor Corporation in a deal that could help establish Toyota's system as a standard for the industry.


Toyota has been trying to sell its hybrid system to a variety of automakers to help offset its high development cost. Ford will incorporate the Toyota technology into a hybrid system it plans to introduce late this year in a gasoline-electric version of its Escape sport utility vehicle, the two companies said yesterday in a statement.


The Ford vehicle would be the first hybrid offered by an American carmaker and the first application of hybrid technology in a S.U.V. Powered by the combination of a gasoline engine and an electric motor, hybrids are more fuel-efficient and less polluting than vehicles with traditional gasoline engines.


Toyota, a close rival to Ford in terms of global vehicle sales volume, has established a strong lead in hybrid vehicles. The carmaker became the first to mass produce hybrids with the introduction of the Prius sedan in 1997. Demand for the latest version of the Prius has been stronger than Toyota expected, though sales volume remains small compared with mainstream models like the Camry.


The Ford deal follows a similar pact between Toyota and the Nissan Motor Company, which agreed in 2002 to license Toyota's gas-electric hybrid system for use in vehicles that Nissan plans to sell in the United States by 2006.


But Ford is leasing considerably less technology than Nissan. Although Toyota says it makes money on its hybrid vehicles, analysts say it may be a long time before hybrids are a significant source of income given the high cost of developing the vehicles and their relatively low sales volumes.


Toyota sold 53,000 hybrid vehicles globally last year, or less than 1 percent of its worldwide sales of 6.07 million vehicles.


Automakers that use any of Toyota's patents are likely to have a more difficult time making money. At a Detroit media event in January, Carlos Ghosn, the chief executive of Nissan, said that the Altima hybrid would not be profitable.


For Toyota, the licensing agreement with Ford is not expected to be a big revenue generator.


Kurt Sanger, auto analyst for ING Securities in Tokyo, said the importance of the deal with Ford was that "Toyota is setting the standard for the hybrid power train.''


"Toyota is making strides to build critical mass for its hybrid program,'' Mr. Sanger said.


Under the agreement announced yesterday, Toyota will license to Ford a patented hybrid control system that links a gasoline engine with an electric motor. The companies refused to disclose the terms of the licensing agreement or how much Ford would pay in royalties. In addition, the companies agreed to license to each other emission reduction technologies that each has developed.


So far, American automakers have been less enthusiastic than their Japanese rivals about hybrid vehicles, arguing that it is difficult to justify the added cost of the technology when few American consumers seem concerned about fuel economy. For several years, Toyota and Honda have been the only automakers selling mass-market hybrid cars. And so far, they are the only companies with concrete plans to offer a range of the vehicles.


Toyota already sells a hybrid minivan in Japan and plans to roll out a hybrid version of its Lexus RX 330 S.U.V., the RX 400h, later this year in the United States. Toyota also plans to introduce a hybrid version of its Highlander S.U.V. in the United States next year. It has set a goal of making 300,000 hybrid vehicles a year by mid-decade.


Honda, which sells two gasoline-electric vehicles, the Insight and the Civic Hybrid, also plans to offer a hybrid version of its Accord sedan.


The new hybrids from Ford, Toyota and Honda will be more expensive than traditional gasoline-powered versions of the same vehicles, though the companies have not yet said by how much.


http://www.nytimes.com/2004/03/10/business/10hybrid.html