The US Department of Energy has awarded Ford a US$10m grant for research, development and demonstration of plug-in hybrid electric vehicles (PHEVs).

Ford said it received the grant for the continued development of a demonstration fleet of 20 PHEVs.

The total project cost is US$20m and the government will fund half.

Last June, Ford delivered the first flexible fuel capable plug-in hybrid electric SUV to the department. The Escape PHEV, capable of running on petrol or E85, is part of a demonstration fleet the automaker is developing with Southern California Edison, the Electric Power Research Institute, DTE and Johnson Controls/Saft.

Advanced vehicle testing is under way on vehicles in California, Michigan, and Washington, DC. The company delivered the first petrol-only Escape PHEV to Southern California Edison in December 2007.

"With plug-in hybrids, we have the potential to significantly change our transportation and energy future," said Nancy Gioia, director of Ford's sustainable mobility technologies and hybrid vehicle programs. "Our ultimate goal is to create plug-in vehicles that can be mass produced and meaningfully contribute to our nation's energy security."