Ford introduced the world's first hybrid SUV in 2004, the Ford Escape Hybrid. We followed up with the Mercury Mariner hybrid in 2005 and the Mazda Tribute hybrid in 2007. All of these vehicles are full hybrids, meaning they can run exclusively on battery power, exclusively on gas power or on a combination of both. As of early 2008 we had sold more than 70,000 hybrids worldwide. The 2008 Escape Hybrid gets approximately 90 percent better fuel economy in city driving than the six-cylinder gasoline model, and it has similar engine performance. Compared to the four-cylinder Escape, the hybrid powertrain offers superior power and a fuel-economy improvement in city driving of 70 percent. Even with the launch of competitors' hybrid SUVs, the Escape, Mariner and Tribute hybrids remain the most fuel-efficient SUVs currently available. We are continuing to develop additional hybrid vehicle applications. For example, we plan to launch hybrid versions of the popular Ford Fusion and Mercury Milan sedans in 2008 in North America.

Ford is also working on hybrid applications specifically designed to deliver benefits for the European market. Overall, European vehicles are already more CO2 efficient than North American vehicles, so hybrids do not offer the same degree of CO2 emissions improvements in Europe that they do in the U.S. We thus expect to see the widespread adoption in Europe of various component parts of hybrid technologies, rather than full-hybrid vehicles. One solution we are working on is "micro-hybrids," which combine stop/start systems with a smart regenerative charge. Micro-hybrids cannot run on electricity without the help of the combustion engine, but they offer another advantage: the stop/start system shuts off the engine at every stop, providing considerable fuel savings, especially in city driving conditions. And the hybrid powertrain system is able to convert a percentage of the braking energy into electrical energy and store it in batteries for later use, which also reduces fuel consumption. In the European driving environment, micro-hybrids that build on diesel technology, which is widely used there, may offer the best combination of performance, fuel economy and affordability. We have already demonstrated micro-hybrid technology in prototypes in recent years.