Mercedes and GM to develop hybrid cars

General Motors and DaimlerChrysler have announced plans to join forces to develop a new generation of hybrid-powered vehicles, underlining the potential for environmentally friendly cars which use much less fuel.

The two car makers will spend hundreds of millions of dollars to develop the new hybrid technology jointly but will equip their GM, Mercedes and Chrysler models separately. The development work will be carried out in Michigan.

Hybrid cars use a combination of electric motors and conventional combustion engines to power them. Toyota has led the way with its Prius hatchback, which has sold more than 200,000 since its launch in 1997. This year Toyota expects to sell about 130,000 of the hybrid cars.

California has pioneered the use of more fuel-efficient vehicles but according to some estimates up to 15 per cent of all the world's cars could be hybrid-powered by 2020.

GM said the first models to feature the new hybrid technology would be the Chevrolet Tahoe and the GMC Yukon in 2007. Unlike typical hybrid cars such as the Prius, which have a single large electric motor, GM and DaimlerChrysler plan to use two electric motors to assist the engine. At low speeds, the hybrids will work conventionally, with power solely from the electric motors unless the car is carrying heavy loads. But at high speeds, the electric motors will also kick in to provide additional power to the engine.

The two companies have signed a memorandum of understanding but plan to move to a binding definitive agreement next year.