updated 11/9/2005 3:53:55 PM ET 2005-11-09T20:53:55

Ford Motor Co. introduced a new engine and transmission Wednesday designed to offer more power and improve fuel economy. The No. 2 U.S. automaker also said a hybrid version of the Ford Escape sport utility vehicle will begin service as a taxi in New York City.

Ford said its 3.5-liter, 250-horsepower V-6 engine will power 20 percent of its vehicles by the end of the decade. It will debut in the 2007 Ford Edge and Lincoln Aviator crossover vehicles, which are due out next year.

The crossovers also will feature Ford’s new six-speed automatic transmission, which the company says can improve fuel economy by up to 7 percent and eliminate noise and vibration.

“This powertrain is an innovative solution to answering the call for better fuel efficiency, more refinement, more power and clean emissions without any sacrifices,” said Barb Samardzich, Ford’s vice president of powertrain operations.

Ford currently offers a 3.0-liter V-6 with 203 horsepower on its 2006 Ford Freestyle crossover. The new engine offers more horsepower and torque but will be the same size as the old engine, which will allow it to be installed in a wide variety of vehicles.

The new engine also has been designed to accommodate advanced technologies, such as gas-electric hybrid capability and direct injection, which lowers emissions by injecting fuel straight into the engine. It will be built at Ford’s engine plant in Lima, Ohio.

Ford developed the new transmission with General Motors Corp. in a historic partnership announced in 2002 that helped the companies save on engineering and parts. Ford said its primary goal with the new transmission was to reduce noise and vibration.

GM announced late last month that its transmission from the partnership, the Hydra-Matic 6L80, would debut on the 2006 Chevrolet Corvette, Cadillac STS-V and Cadillac XLR-V.

A hybrid version of the Ford Escape will begin ferrying customers around New York on Thursday, Ford said. The hybrid Ford Escape, which gets up to 36 miles per gallon in city driving, is already used for taxi service in San Francisco.

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