DETROIT – Ford Motor Co. acknowledges it has licensed the rights to about 20 Toyota Motor Corp. hybrid system patents in order to help the American auto maker develop its first-ever gasoline-electric hybrid vehicle.

A hybrid version of the Ford Escape – which is the first hybrid SUV for the North American market and the first carrying a U.S. nameplate – bows this fall, employing variations of the technology Ford received through a partnership struck with Toyota 18 months ago, Phil Martens, Ford Motor Co. group vice president-North America product creation, tells Ward’s at the Society of Automotive Engineers World Congress here.

Martens says, as part of the technology-sharing agreement between the two companies, Ford is required to disclose which patented technology it used in creating its hybrid. Although neither company reveals which specific hybrid technologies were lent to Ford, Martens says some of the patents concerned transmission strategies and algorithms.

He is quick to point out other suppliers, such as Sanyo Electric Co. Ltd. and Continental Teves, played even larger roles than Toyota in Ford’s hybrid development. (See related story: Sanyo Enters Automotive Arena with Hybrid Escape Battery Pack)

Hybrid Escape

Nevertheless, Toyota “kick-started” Ford’s initial foray into the hybrid marketplace, Martens says.

“When we started the hybrid program, we actually had an option with Toyota to license all of the patents or a select few that we just needed to get the program started,” he says. “We’ve adapted and developed our own solutions within Ford’s system and that’s given us a lot of confidence.

“We made the decision to do just a limited number required to get the program started. It was about 20 patents. We did that so we would have no infringement issues or anything like that and this has basically been so that at this point in time, if you were to look at where we’re at, we’ve basically got all the expertise we need.”

Martens says much of Ford’s hybrid strategy is different than Toyota’s application currently on the road. Ford, for instance, has mated the powertrain to 4-wheel-drive, edging out Toyota’s own Lexus RX 400h in that regard. The RX 400h won’t come to market until this fall, shortly before Toyota unveils a hybrid version of its Highlander cross/utility vehicle.

A Ford spokesman says Ford didn’t copy much of Toyota’s hybrid blueprint and didn’t necessarily have to obtain the rights to use all of the approximately 20 patents it grabbed from Toyota. Ford has 100 of its own hybrid-related patents on the vehicle.

“There were some similarities in the system and rather than get wrapped up in legal issues, you buy the technology,” the spokesman says. “It’s not unlike if someone were to do a torsion bar copying our F-150 tailgate. If Nissan (Motor Co. Ltd.) did it or Toyota did it, the design might be different, but it’s our idea first. We own the patent to it, there’s going to be a licensing agreement to use that design. It’s similar here.”

The Toyota-Ford licensing deal – which includes emissions-purification and direct-injection technology shared between the two companies – is part of the Japanese auto maker’s broader goal of global promotion of hybrid technology.

Under a 2002 agreement with Nissan, Toyota is providing its auto-making rival with blueprints for components so that Nissan can develop its own system. A hybrid-powered Altima goes on sale in 2006.

Talks are in progress with other auto makers as well, and at varying points in the process.

“We have a lot of faith in hybrids to become the standard of the industry,” says a Toyota spokesperson. “The more familiarity, the more demand there will be.”

The philosophy of sharing, of course, is not as altruistic as it sounds. Without that demand – and the licensing agreements for Toyota technology that are sure to accompany it – Toyota wouldn’t have much profit potential with its hybrid technologies.

While Toyota says its second-generation Prius is designed to make money, its $19,995 price tag and limited sales projections make it difficult to recoup expensive hybrid development costs on its own.

“Economies of scale, for sure,” the spokesperson says. “If you can license the technology, there’s more return on investment.”

Ford would like to match Toyota’s “scalability” in the future, but is still cautiously evaluating its commitment to hybrid development, Martens says.

“If you look at it over a long period of time, (Toyota is) comfortable enough to where they can start scaling. We did license a few patents (from them) to get us going, but we don’t need those anymore. Now when you look at scalability (from Ford’s point of view), that’s a thought we’ve actually talked about.

“But we want to be very careful here. We ultimately don’t know how big the hybrid market will grow in the U.S.,” he says, cautioning against being too bullish on a powertrain strategy that has huge software and component development costs with no predictable return on investment.

Martens says Ford’s own road to profitability in the hybrid segment would be greatly expedited if it could develop most of its core future hybrid technology in-house with its own North American partners. Non-core technologies, such as battery packs, would continue to be outsourced.

“A real challenge for us with our first hybrid, the first built in North America, has been the global scope of our supply base,” he says. “A hybrid powertrain, I can tell you, is extremely complex. There are so many parts that no single supplier can deliver systems. “It takes partners who are located in Europe, in Asia, to deliver enough parts. In the short run, with relatively low production volumes, we think this is fine. But in the long term, we’re looking to develop technical competencies to do entire hybrid systems.”

Martens says Ford is scouring its automotive supply base, as well as non-traditional suppliers such as Sanyo, to make North American hybrid development competency a reality.

“We’re actually now very comfortable (saying) we can do this in-house. We need some partners…but we need those partners in North America. We’re starting to evaluate who they would be and how would (the next generation) look going forward.”

With its second generation of hybrid technology on the market, Toyota’s seemingly found a way to make back much of its initial investment by leasing out bits and pieces of its first-generation technology.

But the auto maker says it’s not out hawking its wares; rather the competition has approached it for the technology in every instance.

Even then, it’s not necessarily giving out the latest and greatest of its hybrid knowledge, instead leasing hybrid components from its first-generation Prius, brought to market in Japan in 1997.

Toyota since has moved on, and its new system – in the second-generation Prius and the forthcoming RX 400h and Highlander hybrids – is powered by the more fuel-efficient, more powerful and far more complex Hybrid Synergy Drive system. In the case of the RX 400h, such a system is coupled with a V-6, which is a break from the Prius’ employment of a 4-cyl.

It’s likely key patents from this new and improved system won’t be licensed to the competition for quite some time.