Hybrid vehicles twin a gasoline engine to an electric motor and batteries to boost fuel economy.

In a briefing with reporters later, Bill Ford also said he will announce a new restructuring plan to stem steep losses in the automaker's North American division on Oct. 20. The Ford family scion, who declined to give details, said he will update investors after the automaker announces third quarter financial results on that day.

The push into the hybrid segment comes as Ford struggles with strong competition, soaring health care and raw materials costs, and a slide in U.S market share. Ford's North American auto operations swung to a pretax loss of $1.21 billion, including charges, in the second quarter.

Ford is trailing Toyota Motor Corp. and Honda Motor Co. Ltd. with the fuel-efficient hybrid technology. The Japanese automakers have been successful in cultivating an image as the leaders in environmental technology by offering a range of hybrid vehicles. Toyota plans to sell up to 250,000 worldwide this year, mainly in North America.

The CEO said that, by 2010, the automaker will have the capability to build about 250,000 hybrid vehicles, with the ability to boost capacity based on demand.

Ford, which is considering expanding the hybrid lineup across its European luxury brands, currently makes about 24,000 hybrid vehicles annually.

"We know that our customers are concerned about energy," the CEO said. "Our job is to alleviate some of their concerns with viable options in their choice of transportation."

Bill Ford, who plans to finance the hybrid strategy with cash reserves and funds from the recent sale of its Hertz Corp. rental car unit, expects the company will make money on hybrid vehicles by 2010.

"As we get into the second and third generation (of vehicles), as volume ramps up, costs will come down," he told reporters at a briefing following his speech.

Ford builds the Escape hybrid sport utility vehicle and will begin production this year of the Mariner hybrid, its Mercury version of the Escape.

MORE ETHANOL-FUELED VEHICLES IN 2006

By 2008, the Detroit-based company said it will have five hybrid vehicles on the road, including the Escape, Mariner and Mazda Tribute SUVs.

Ford had previously said it has trouble offering more hybrid vehicles because of a shortage of specialized components and also what its executives have characterized as a "predatory" approach taken by some Japanese automakers.

Phil Martens, Ford's chief of product development, said the company is trying to develop a lot of the technology in house, and is working with US suppliers such as Delphi Corp. for hybrid components.

Ford gets battery packs for its hybrid systems from Japan's Sanyo Electric Co. Ltd. and other parts from various suppliers, such as Toyota affiliate Aisin Seiki Co. Ltd.

In another push to produce vehicles with alternative fuel systems, Ford plans to launch four vehicles in 2006 that will run largely on ethanol, a corn-based fuel. That will raise production of vehicles that can operate with more than just gasoline in 2006 to as many as 280,000 units.

The automaker will offer the ethanol-fueled option in its best-selling F-150 pickup truck and the Crown Victoria, Mercury Grand Marquis and Lincoln Town Car sedans.

Ford will launch a new corporate advertising campaign in the fall with the theme of innovation, the CEO said, but he declined to say how much it will spend in the campaign.

Bill Ford also said the company will begin a pilot program that will offset greenhouse gasses such as carbon dioxide, emitted in the production of hybrid vehicles. Through the plan, Ford will pay for projects around the world that reduce carbon dioxide emissions.