German luxury car maker Daimler and Toyota, the world's biggest auto group, are mulling joint development of fuel cells for electric vehicles, a press report said Tuesday.
"There is strong interest in sharing development costs" via a joint venture, a source close to Daimler told the Financial Times Deutschland.
It would be the first major cooperative project for the two groups, the newspaper added.
Fuel cells use a reaction of hydrogen and oxygen to produce electricity in a process that does not emit heat-trapping gasses, which contribute to global warming.
Production of the hydrogen needed can result in the production of such gases however, and as such there are some environmental issues associated with the process.
Daimler has already invested more than one billion euros (1.23 billion dollars) in fuel cell technology since 1994, two years after Toyota began exploring it.
On Thursday, US electric car maker Tesla announced that Toyota would buy shares in Tesla, joining Daimler, which owns a stake of more than five percent.