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BMW, Daimler to co-develop hybrids for premium cars

German carmakers BMW and DaimlerChrysler have agreed to co-develop hybrid transmission systems for rear-wheel-drive premium cars, they said on Thursday.

The accord on so-called „mild hybrids” aims to start rolling out products within the next three years, they said in a statement, citing benefits of sharing costs, combining know-how and reaping economies of scale once the hybrids go on sale. The move reflects German carmakers' grudging acceptance that hybrids - long dismissed as a fad in German boardrooms but made successful by Japan's Toyota Motor Corp. - appeal to consumers, especially given worries about global warming. The project complements a three-way alliance with General Motors to develop „full” hybrids that link an electric motor and batteries to a standard combustion engine. A mild hybrid can boost acceleration and make engines work more efficiently in stop-and-go traffic. It costs less than a full hybrid, which can cut fuel consumption by a fifth but adds thousands to the price of a car. But mild hybrids do not offer the same fuel savings as a full hybrid and cannot run on battery power alone. DaimlerChrysler research head Thomas Weber told Reuters in 2005 that the company was seeking partners for mild hybrids. Thursday's statement said the two would be equal partners. A BMW spokesman said the project would focus at first on petrol hybrids, given the better potential for fuel savings compared with diesel engines, but added that both petrol and diesel hybrids would be considered. The spokesman would not give a budget for the project. GM is set to start selling full-sized sport utility vehicles with full hybrid technology in late 2007, followed by Dodge Durango full-sized SUVs amid a range of other models. Daimler's Mercedes-Benz is eyeing a full hybrid launch shortly thereafter. BMW plans a full hybrid within three years. (Reuters)