GM, DaimlerChrysler, BMW spend $1 bln on hybrid system

General Motors Corp., DaimlerChrysler AG and Bayerische Motoren Werke AG will spend more than $1 billion combined to develop a shared gasoline-electric system for autos to compete with hybrid leader Toyota Motor Corp. This was first announced in December 2004 by GM, the world's largest carmaker, and DaimlerChrysler, No. 5 globally. The three automakers are making their hybrid push a decade after Toyota first began selling Prius cars and are spending half the $2 billion some Toyota officials have said it spent on hybrid research in the 1990s. Toyota, the world's No. 2 automaker, has sold more than 600,000 hybrids worldwide. Honda Motor Co., the world's second biggest marker of hybrids, is quadrupling production of the fuel-efficient cars in Japan. „Toyota and Honda have a competitive edge over their rivals,” said Fumiyasu Sato, chief executive at Milestone Asset Management, a Tokyo-based investment adviser. „It's not going to be easy for other companies to catch up.” GM, DaimlerChrysler and BMW had previously declined to disclose investment amounts in their hybrid partnership. The cost of the jointly developed system includes at least $300 million for a transmission, Andreas Truckenbrodt, executive director of DaimlerChrysler's hybrid program, told reporters at a dinner in Traverse City, Michigan, yesterday. „It costs a lot of money, and we're sharing resources,” Truckenbrodt said. The three companies are to provide additional details of their system tomorrow at an industry conference in Traverse City, he said. Toyota President Katsuaki Watanabe has said the Toyota City, Japan-based company is working to cut the cost of its hybrid components by 50%. Toyota has licensed hybrid technology to Ford Motor Co., supplies components to Nissan Motor Co. for a hybrid Altima sedan that goes on sale in 2007, and plans to work with affiliate Fuji Heavy Industries Ltd.'s Subaru on gasoline-electric vehicles. Gasoline-electric hybrid vehicles save fuel and reduce emissions by combining a gasoline engine, a battery pack and brakes that capture energy from stopping. The added components add about $3,000 to the retail price of such vehicles. GM, DaimlerChrysler and BMW have said sharing development expenses will allow them to produce hybrids at lower cost than would be possible working individually. „The original concept was the three partners were going to have a much lower cost system,” Malesh said. Toyota „is a moving target. Everybody knows how aggressive Toyota is on cost reduction, so it's not clear how much advantage” the partnership will have, he said. „There are multiple hybrid systems under development together,” Nitz said. „It's a family of products.” The first models using technology developed for the new hybrid system will be versions of GM's Yukon and Tahoe sport-utility vehicles, due in 2007, said Larry Nitz, head of GM's hybrid program. Chrysler, DaimlerChrysler's US unit, will sell a hybrid Durango SUV in 2008, followed by BMW models within three to five years, the companies said. Toyota plans to sell 1 million hybrids annually after 2010, with at least 600,000 coming from US plants. Honda in May said it will add a low-cost hybrid by 2009 that will have sales of 100,000 units a year in the US and as many as 200,000 annually worldwide. Ford, the world's third-largest automaker, in June dropped a goal of selling 250,000 hybrids a year in the US, more than 10 times its current volume. The automaker said it would focus on making vehicles that run on alternative fuels such as ethanol. (Bloomberg)