BMW signed a memorandum of understanding this week with General Motors Corp. and DaimlerChrysler in an effort to create new hybrid engine technology. The company expects to finalize the "alliance of equals" agreement later this year.

The companies may add other carmakers to the partnership, according to Tom Stephens, GM vice president for powertrain. The partnership also could mean a more affordable hybrid price-tag, the companies said. Currently, Hybrids cost about $4,000 to $9,000 more than their traditional counterparts (Dee-Ann Durbin, AP/Detroit Free Press).

The partnership stands to threaten Japan's current lead in a booming hybrid market. Demand for gasoline-electric cars has risen in correlation with concerns over soaring fuel costs and global warming. For now, Toyota Motor Corp. and Honda Motor Co. dominate the hybrid market. GM and DaimlerChrysler had signed an agreement to develop hybrid systems for large vehicles last month, and GM said it will use that technology on large SUVs in 2007.

With all three companies on board, an investment "a three-digit million dollar sum" is expected in total for the project. "We believe we can deliver 25 percent improvement" in fuel economy, said Lawrence Burns, GM's vice president for research and development. "We have to have an alternative, long term, to petroleum" (Wall Street Journal). "This is good news because while BMW has been an industry leader in diesel and hydrogen technology, it hasn't been a factor in hybrids," said Jim Hossack, a vice president with AutoPacific, an automotive consulting firm. "BMW can't afford not to look at other choices to learn which is the most economic and cost-efficient."

The first GM hybrid will be the 2007 Chevrolet Tahoe and GMC Yukon full-size SUV, while DaimlerChrysler plans to unveil in 2008 its hybrid Dodge Durango midsize SUV. BMW did not specify which vehicles it intends to offer (Jim Mateja, Chicago Tribune). "The creation of a shared technology platform will allow us more quickly to integrate the best technologies on the market," said Burkhard Goschel, BMW's management board member with responsibility for development and procurement. "And because the technologies will be adapted to the individual models, the participating brands will retain their distinctive characters" (John Griffiths, Financial Times).