Nov. 14 (Bloomberg) -- Ford Motor Co., the second-largest U.S.-based automaker, plans new, smaller engines and other technologies such as diesels, hybrids and hydrogen power to improve the fuel economy of its cars and trucks.

The plan will mean ``more fuel-efficient vehicles that emit fewer greenhouse gases'' while maintaining safety and performance, Chief Executive Officer Alan Mulally said today in a statement. Dearborn, Michigan-based Ford said the effort will require a ``significant'' investment, without giving a figure.

``It's a bit of a gutsy decision,'' said David Cole, chairman for the Center for Automotive Research in Ann Arbor, Michigan. ``It's expensive. That's a lot of new engines, and you are competing against alternative technologies like hybrids.''

Automakers are under pressure from governments to reduce gasoline use and pollutant emissions, including proposals in the U.S. Congress for tighter fuel-economy standards that are opposed by an auto trade group that includes Ford. The U.S.-based automakers have trailed Japanese rivals such as Toyota Motor Corp. and Honda Motor Co. in gasoline-electric hybrids.

Ford said its initial phase will center on smaller engines boosted by turbochargers that will improve fuel economy by 10 percent to 20 percent, as well as lighter vehicles. The first model affected will be the new Lincoln MKS sedan, with changes slated for ``less than a year'' after the car's scheduled mid- 2008 introduction.

Hybrids, Diesels

The next phase, between 2012 and 2020, will include cutting vehicle weights by 250 to 750 pounds, as well as more gasoline- electric hybrid models, diesel engines and new higher-efficiency transmissions, Ford said.

Other changes include improved aerodynamics and electronic steering that doesn't draw power from the engine. Ford also said it will keep working on so-called plug-in hybrids that can recharge at standard electrical sockets and on hydrogen fuel cells.

Mulally, speaking to reporters today at the Los Angeles Auto Show, said sustainability is a major issue for the automaker. ``We need to do it right now and do it in volume.''

Today's announcement comes a day after Chairman William Clay Ford Jr. said the company is creating the Transformation Advisory Council, a team of outside specialists that will help Ford Motor solve challenges of energy independence.

Mulally also made `` sustainability'' the focus of his keynote speech today at the Los Angeles Auto Show.

Ford, along with larger rivals General Motors Corp. and Toyota, is part of the Washington-based Alliance of Automobile Manufacturers, a trade group that opposes a U.S. Senate-passed bill to raise the combined average standard to 35 miles per gallon by 2020 for cars and light trucks.

The alliance backs a House measure that calls for separate standards of 35 mpg for cars and 32 mpg for trucks by 2022.

Ford shares fell 2 cents to $7.98 at 4:20 p.m. in New York Stock Exchange composite trading. They have risen 6.3 percent this year.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6bloomberg.net

Last Updated: November 14, 2007 16:22 EST