The Legislature gave final approval for $78 million in tax credits for Ford Motor Co. to develop battery packs for future hybrid and plug-in vehicles. Gov. Granholm is expected to sign the legislation.

The company said the tax breaks would lead to investments of up to $500 million and create 1,000 new jobs in Michigan.

Ford said the investment would lead to production and assembly of the next-generation hybrid vehicles and lithium-ion battery packs at a plant yet to be identified.

The tax breaks for Ford in 2012-14 would allow the company to consolidate production of battery power systems in Michigan, said Nancy Gioia, Ford’s director of global electrification.

She said Ford would move the assembly of battery packs to Michigan from a Delphi Corp. plant in Mexico.

“This will make Michigan a center of excellence for electrification,” Gioia said.

The legislation also provides $42 million in tax credits for General Motors and Dow Kokam of Midland to engineer battery packs for hybrids vehicles.

The tax credits would be given only if the companies create the number of new jobs required by the legislation. Ford must produce at least 225,000 lithium-ion battery packs in three years, and would qualify for additional tax breaks after 2014.

The state previously granted Ford tax credits to develop power systems for all-electric vehicles. But the tax advantage for hybrid batteries is more significant because hybrids will comprise a much larger share of the electric vehicle market, Gioia said.

Hybrid vehicles are powered by batteries and gasoline engines and include models such as the Ford Fusion hybrid and Toyota Prius.

Ford also sells the Escape SUV hybrid and Mercury Milan hybrid sedan.

Ford said the hybrids would be built off the company’s compact car platform.

Previously, Ford announced plans to introduce a battery electric version of its Transit Connect commercial van in 2010, a battery electric Ford Focus compact in 2011, as well as a next-generation hybrid vehicle and a plug-in electric by 2012.

Ford plans to begin building a new version of the Focus late next year at its Michigan Assembly Plant in Wayne and an electric version of the Focus at that plant in 2011.

Ford already has pledged to spend $500 million to retool Michigan Assembly to build the Focus and is to receive more than $160 million in local and state tax credits and grants for that project.

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