STUTTGART -- BMW AG and Daimler AG will probably end their so-called "Two Mode" hybrid alliance with General Motors at the end of the year.
"The dissolution of the joint venture still isn't certain, but it's probable," a Daimler spokesman said.
BMW also says it doesn't want to continue the alliance.
Two Mode is the marketing name for a hybrid drive system developed by BMW, Chrysler, Daimler and General Motors. Two different Two Mode transmissions have been developed, one for rear-drive vehicles and one for front-drive vehicles.
The alliance was established in 2005.
In a few months, BMW will launch a two-mode version of X6 SUV globally. A version of the Mercedes-Benz M class with the technology will be launched this year, but only in the United States.
Daimler wants to avoid a major investment in aftersales and service for a car that it expects will have low production numbers.
According to BMW and Daimler, this expensive system has no future.
"None of the other hybrid development work in our company is based on the two-mode technology," a BMW source said.
The Two Mode transmission has two electric motors and delivers the fuel economy advantages of hybrid driving in the city and on the highway. A regular one mode hybrid, such as the Toyota Prius, uses the electric motor to drive the vehicle at low speeds and to assist the gasoline engine when accelerating. At highway speeds, the electric motor in the Prius does not drive the vehicle. The Two Mode uses its electric motors to drive the wheels all the time, sometimes in conjunction with the gasoline engine.
Another alliance at risk
The German premium brands also are not sure whether to keep a separate hybrid alliance going.
"We still haven't decided whether we will continue our cooperation with Daimler," a BMW spokesman told Automotive News Europe sister publication Automobilwoche.
An end to the joint work on hybrids would be a blow to the companies' desire to cooperate more fully with one another in a variety of areas.
It is technically easier and less costly when companies share in the development of new technologies such as alternative drives and lithium-ion batteries.
Even purchasing can be carried out more easily. BMW and Daimler already work together on procurement in certain areas.
While BMW seems reluctant to form partnerships in this area, Daimler has indicated that it would be glad to keep working with BMW on hybrids.
BMW is contemplating new hybrid and battery technologies. "There have also been discussions with other manufacturers and suppliers," a spokesman said.
Daimler is turning to modular hybrid building blocks with scalable lithium-ion batteries.
They are based on the hybrid drive that was initially developed for the S-class and the 7-series upper-premium sedans in another joint venture with BMW and auto supplier Continental AG.
BMW plans to introduce the X6 crossover with a Two-Mode hybrid powertrain in late 2009 or early 2010. This will be a gasoline-powered hybrid that uses the Two Mode transmission developed by BMW, Chrysler, Daimler and GM. In this application, the Two Mode transmission is a four-speed rear-drive system that delivers the benefits of electric-assist hybrid propulsion in both city and highway driving and also can tow heavy loads.