updated 3/3/2006 10:09:58 AM ET 2006-03-03T15:09:58

General Motors Corp. and Toyota Motor Co., the world's two largest automakers, said Thursday they're ending their work together on hydrogen fuel cells but will continue to collaborate on safety and energy research for the next two years.

GM and Toyota will research vehicle-to-vehicle communication that can help prevent crashes and vehicle tracking systems that can cut down on traffic congestion. They'll also explore energy use from drilling to tailpipe emissions, GM spokesman Scott Fosgard said.

"Collaborating, we could set the standards for this type of technology," Fosgard said.

A Toyota spokeswoman said the Japanese automaker had no immediate comment. Fosgard said the companies reached the agreement early Thursday.
GM and Toyota first collaborated on hybrid vehicles and hydrogen fuel cells in 1999. In the beginning, there was even talk of giving Chevrolet a rebadged version of the Toyota Prius hybrid.

The two companies extended that agreement in 2004 but dropped hybrid technology to concentrate on fuel cells. The latest agreement, which would have expired at the end of this month, will be extended to March 31, 2008.

Fosgard said the companies will no longer collaborate on fuel cells because that technology is moving out of the research stage and into the more proprietary development stage. But both companies remain open to other research projects in mutually beneficial areas, he said.

Collaborative efforts between automakers are rare but not unheard of in the fiercely competitive industry. Under a separate partnership, GM and Toyota run an auto plant together in Fremont, Calif., which was set up in 1984. The plant makes the Toyota Corolla, Toyota Tacoma and Pontiac Vibe.

GM, DaimlerChrysler AG and BMW AG are cooperating on hybrid vehicle systems, while GM, Ford Motor Co., DaimlerChrysler and Hyundai Motor Co. are part of a fuel cell project with the U.S. Department of Energy.

But the partnership between GM and Toyota is one of the most high profile because of the companies' vast size. Together, they control more than a quarter of the worldwide auto market.

The partnership also helps project good relations between the two automakers even as they battle it out in the marketplace. Tsuyoshi Mochimaru, auto analyst with Deutsche Securities in Tokyo, said recently that GM and Toyota should try to maintain the alliance if only for symbolic reasons.

GM has been struggling with U.S. market share losses, largely due to Asian competition, and posted an $8.6 billion loss in 2005. The company has outlined a plan to cut 30,000 jobs and close 12 facilities in North America by 2008.

Meanwhile, Toyota posted a $3.35 billion profit in the October-December quarter, its best ever, and it's on track to make a record profit when its fiscal year ends March 31. Toyota still sells fewer vehicles than GM -- 7.95 million in 2005, compared with GM's 9.17 million -- but could be on track to unseat GM as the world's largest automaker in the next few years.

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