TRAVERSE CITY, MI – He's thrilled Ford Motor Co. is introducing the Ford Escape Hybrid, the auto industry's first full-hybrid SUV. But the road to high-volume mass-production will be a difficult and expensive one, warns Jim Padilla, Ford's chief operating officer and chairman-Automotive Operations.

"Escape Hybrid is a great example of Ford's commitment to helping create a better world," he says.

Despite all the warm and fuzzy feelings hybrid vehicles generate among consumers, he says building them adds a new degree of difficulty in the assembly plant, already a highly complex and chaotic place.

Jim Padilla is Ford’s chief operating officer and chairman of its Automotive Operations.

"This is new technology, not just new vehicle technology. It's also new technology in our plants," he says. Conventional assembly line roll-offs are "pretty hairy" to begin with, but vehicles with potentially dangerous high-voltage power systems add another dimension, he says here at the Management Briefing Seminars.

Ford initially will build about 15,000 units annually but expects demand will be greater.

Hybrid technology offers a lot of opportunities, but it's also a tough business case, Padilla adds.

The cost of the systems will come down as volume increases, but he says, "We're also going to need some help from the government to ‘incentivize’ customers to buy these products. Everybody says they want a hybrid, but will they spend the $3,500 (extra)?

“Most of our customers pay for our products based on their monthly payment, and this might just put it out of their reach. So we'll see how that goes," Padilla says.

And as it's being introduced, the additional cost to build a hybrid is far higher than $3,500, although how much more he won't say.