Ford will produce 20 experimental vehicles that will be tested at Southern California Edison. Plug-in hybrids can run on battery power only for up to 100 miles, but reliable batteries -- mostly likely lithium ion -- have been a challenge for engineers.

Ford wants the batteries higher cost to be spread over multiple uses, including storing electricity at night and then uploading the power back to the grid during the day, a technology to "vehicle to grid" power.

Plug-in hybrid electric vehicle technologies are not yet competitive due primarily to the high cost of advanced batteries. Ford and SCE will explore whether these batteries have other uses that could reduce their cost to consumers. For example, a popular vision of plug-in hybrid automotive technology is the potential for owners to charge their vehicles in the evening when the cost to produce electricity is low, and then store and use that energy during peak hours of the day, when electricity costs are high. Advanced batteries also could store energy from rooftop solar panels more efficiently. The two companies will evaluate and model the potential economic value of such innovative uses.

Of course the dirty little secret in California is -- will the grid be ready for plug-in hybrids? When Californians power up their AC units during heat waves like they are experiencing now the grid can become stressed, and even a few thousand plug-in hybrids wouldn't help that situation.

Ford is playing catch up GM, which says it will produce a plug-in vehicle by 2010. Whoever is first will find a willing public ready to snap up the cars.