updated 9/7/2005 9:02:32 AM ET 2005-09-07T13:02:32

BMW plans to join General Motors Corp. and DaimlerChrysler AG in a joint effort to develop fuel-saving hybrid engines, the companies announced Wednesday.

Munich, Germany-based BMW Group has signed a memorandum of understanding with GM and DaimlerChrysler and expects to finalize the agreement later this year.

GM and DaimlerChrysler finalized their own hybrid partnership last month. Under that agreement, GM is the lead designer of hybrid engines for rear-wheel and all-wheel-drive, full-size trucks and sport-utility vehicles, front-wheel-drive cars and crossover vehicles. DaimlerChrysler is the lead designer of hybrid engines for rear-wheel-drive luxury cars.

Tom Stephens, GM’s group vice president for powertrain, said the automakers are considering adding more companies to the hybrid partnership. The companies plan to jointly develop engines at a new complex in the northern Detroit suburb of Troy.

“The creation of a shared technology platform for hybrid drives will allow us to more quickly integrate the best technologies on the market,” said Burkhard Goschel, BMW’s head of development.

The companies said they will also be able to make hybrids less expensive. Hybrids now cost around $4,000 to $9,000 more than their traditional counterparts.

In a two-mode hybrid system, a vehicle can be powered either by two electric motors or by the combustion engine, or the systems can be used simultaneously. Toyota Motor Corp. and Honda Motor Co. now dominate the two-mode hybrid market. Ford Motor Co. also sells two sport-utility vehicles that use the technology.

GM has said the Chevrolet Tahoe and GMC Yukon will be the first GM vehicles powered by the newly developed hybrids, while DaimlerChrysler will debut with a hybrid-powered Dodge Durango SUV. The Tahoe and Yukon hybrids are scheduled to debut in 2007, while the Durango could appear in 2007 or 2008.

Hybrid vehicles represented less than 1 percent of U.S. sales last year, but they doubled from the year before to a total of 83,153, according to R.L. Polk & Co., a Southfield, Mich.-based firm that collects and interprets automotive data.

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