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DaimlerChrysler, GM sign hybrid-vehicle pact

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Reuters / August 25, 2005

FRANKFURT -- DaimlerChrysler and General Motors have clinched their deal to co-develop new hybrid vehicle technology, a GM spokesman said on Thursday.

The partners had announced in December an agreement in principle to develop hybrids as they try to catch up with Japanese rivals on the fuel-saving systems that reduce harmful emissions.

"We now have a binding and definitive agreement on development of a full hybrid system," the spokesman said, adding it took effect on Aug. 22.

The automakers have said they will develop a "two-mode" hybrid technology that boosts both acceleration and fuel economy by 25 percent and can be used on a wide variety of vehicles.

The deal teams GM, the world's biggest automaker, and German-American DaimlerChrysler, the global number five, against rivals including Toyota Motor Corp. and Honda Motor Co. Ltd., which have a head start in the hybrid market.

The "two-mode" hybrid system, adapted from GM's transit bus hybrid on the market in some U.S. cities today, uses smaller electric motors that work like a gear set to offer what the partners call superior performance and fuel economy.

That allows the system to use a smaller conventional engine, making it more cost-effective than competitors' hybrids.

GM will first use the system in late 2007 in its Chevrolet Tahoe and GMC Yukon full-sized SUVs, the spokesman confirmed. Chrysler will follow with a hybrid version of its Dodge Durango full-sized SUV among a range of hybrids.

Daimler's Mercedes brand is also working on an application for rear-wheel-drive passenger cars, the spokesman added.

DaimlerChrysler was not immediately available for comment.

Hybrids burn less fuel by adding one or more electric motors to a conventional gasoline or diesel engine. The batteries help power the vehicle and recharge automatically by capturing energy during braking.

The "two-mode" hybrid system will improve fuel economy at highway speeds and trailer towing ability, which are both key for the U.S. market, the companies have said.

Toyota's Prius passenger car, first launched in Japan in 1997, has emerged as the most popular hybrid.

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