Late arrivals to the hybrid-powered scene, automotive giants General Motors and DaimlerChysler, are forming a partnership to design a more fuel efficient and compact hybrid powertrain.

Late arrivals to the hybrid-powered scene, automotive giants General Motors and DaimlerChysler, are forming a partnership to design a more fuel efficient and compact hybrid powertrain.

The two began talks to create the partnership in October last year when both companies realised that they were separately working on the same hybrid technology after similar presentations at an industry conference. They signed an understanding on Monday and are expected to reach a conclusive agreement early next year.

Financial details of the agreement were not released, though GM and DaimlerChrysler are expected to invest millions into the venture since they are currently lagging behind in the race to build and market hybrid petrol-electric vehicles.

The two manufacturers are teaming up to develop a “two-mode full hybrid” which should improve fuel economy in light trucks by up to 25 per cent. GM hopes to market the technology across its brands by the end of the decade, starting with a range of SUVs. DaimlerChrysler will implement the technology in its Mercedes-Benz rear wheel-drive range first.

However, the two manufacturers claim to be taking a long-term approach to hybrid technology, rather than playing catch-up. GM in particular sees petrol-electric hybrids as a temporary solution before the use of hydrogen cells become more widespread.

"We think with the dual-mode, we have the ability to jump and leapfrog those things that are available today and be ready for the next generation that comes after," said Eric Ridenour, head of product development at Chrysler.

Through their partnership, the two companies hope to save millions in research and development costs and speed the mass use of environmentally friendly vehicles.

"Very high volumes is where you make the most impact in trying to satisfy a large customer base or trying to improve the environment," said Tom Stephens, group vice president of GM's power train operations.