The US government will need to drastically increase spending on research into plug-in hybrid vehicles, as well as provide incentives to buyers, for them to become viable, Ford's North American chief said on Wednesday.

"It seems clear that a business case will not evolve, in the near term, without support from Washington," Ford North American president Mark Fields said at a plug-in hybrid conference in Washington, according to the Detroit Free Press.

The paper noted that Ford has pledged to build a demonstration fleet of 20 plug-in hybrid Escape SUVs and handed over a flex-fuel-capable version to the US Department of Energy for testing on Wednesday. Ford said the first vehicles were achieving 120 mpg when driven fully charged in urban areas.

According to the Detroit Free Press, Fields said that the costs of such technologies, along with some technical and logistical challenges, would require government aid and policy changes. The battery packs alone in Escape hybrid plug-ins likely cost about US$6,000 each at today's prices - more than double the typical cost of a traditional hybrid system.

The paper said Fields' recommendations include new battery research programmes, something Congress has already committed to increasing in coming years, federal funds to help pay for retooling factories to build plug-in hybrids, tax credits for plug-in hybrid buyers, and comprehensive government controls over greenhouse gases that would spur new technologies.

"We are doing our part to transform the industry and invest in new technologies," Fields was quoted as saying, noting that two-thirds of Ford's $7bn annual development budget goes toward boosting fuel economy.

"However, in a global environment, a substantial government partnership is required," he added.

Alan Madian, a director of consulting firm LECG, told the Detroit Free Press it estimated plug-in hybrids could not replace 10% of current fuel demand from vehicles until 2036 - assuming they grow more rapidly than SUVs did in the 1980s and 1990s.

Because of growing demand for vehicles in the United States, even if the plug-in forecast is correct "unless substantial efficiency gains are realised simultaneously...we may be using more liquid fuels and petroleum in 2036 than we are now," Madian said, according to the report.