Ford said on Wednesday it would sell a petrol-electric hybrid version of the Ford Escape small sport utility vehicle at a loss while it tries to halve the costs of the hybrid system, Reuters reported.

"We have to subsidise the price of the hybrid technology," Prabhakar Patil, chief programme engineer for the hybrid Escape, set to go on sale late this year, told Reuters. "We feel it's important to get in the market for this technology and get feedback from customers."

According to Reuters, the hybrid Escape, the first such vehicle to hit the market from a Detroit car maker, will boast a combined fuel economy of 35 to 40 miles per gallon in city driving and 30 mpg in highway driving. The four-cylinder base model Escape averages 23 mpg in city and 28 mpg on the highway; executives claim the hybrid Escape's performance will match that of the V6 model.

Reuters said the rollout of the hybrid Escape comes even as Ford tries to cut total automotive costs by $US500 million this year and keep its automotive unit headed toward break-even earnings, a goal many analysts call unrealistic.

Reuters noted that Ford has cancelled plans for a hybrid version of its Explorer SUV, but chairman and chief executive Bill Ford has said the firm was committed to building more hybrid models.

According to Reuters, Toyota has been the leader in the market so far, and has set a target of selling 300,000 hybrid vehicles by 2005.

Patil and other Ford executives working on the program declined to give Reuters an estimate of the hybrid Escape's price, Ford's cost for building the system or how many hybrid Escapes Ford plans to build. Other automakers have estimated the cost of a hybrid system at anywhere from $1,000 to $5,000 per vehicle, Reuters added.

Petrol-powered versions of the Escape on sale in the United States today have price tags ranging between $19,000 and $27,000, Reuters said.

According to Reuters, Patil said several factors would determine how much Ford charges for the hybrid system. Those include whether customers could get federal tax credits for the vehicle, in what parts of the country Ford will sell the models and how much hybrid sales could improve Ford's corporate fuel economy averages.

The news agency said the hybrid Escape may also get a boost from petrol prices that now average nearly $2 per gallon around the United States. The fuel savings from current hybrid models such as the Toyota Prius and Honda 's Civic typically don't cover their extra cost, but Patil told Reuters hybrid buyers don't necessarily expect their investment to pay off.

"Most people are willing to pay a small premium to do the right thing," Patil told Reuters. "But it has to be a small premium."

Patil also said Ford would make a profit on the system if it could halve its costs. Ford engineers said the cost of the system could drop quickly if volumes rise and more vehicle makers rely on similar parts.

According to Reuters, the first hybrid Escapes will be sold to fleet customers, while a version for retail buyers won't be available until the middle of next year. Ford executives told the news agaency that, apart from a small "HYBRID" badge on the rear tailgate, there'll be no exterior differences between a hybrid Escape and a regular model.