A research alliance consisting of General Motors, BMW and DaimlerChrysler plans to invest over $1 billion (Rs 4,650 crore) in the development of a new hybrid transmission and related systems that backers say will leapfrog the market-leading technology now offered by Toyota.

The three automakers have about 500 engineers who have been working for the past 18 months on the joint development of the next-generation hybrid engine technology, which combines a battery-powered electric motor with a conventional petrol combustion engine. The so-called dual-mode hybrid technology that has been under development by the consortium includes an onboard fuel-optimisation computer that determines when and at what speeds the two motors will be used for power and how the on-board battery will be recharged.

Development of the transmission – the core of the project – is expected to cost about $300 million (Rs 13,950 crore) for the partners, said Andreas Truckenbrodt, executive director of DaimlerChrysler's hybrid programs. The remainder of the investment represents the cost of integrating the new hybrid system with other vehicle components, he said.

The hybrid engine will be made available in two rear-wheel drive configurations or a front-wheel drive system, said representatives of the joint development project based in the Detroit suburb of Troy, Michigan. Depending on the requirements of the market and the automaker, the system can be adjusted to provide either improved value or high performance, they said.

Truckenbrodt said that the partners believed that their two-mode hybrid was the best of the hybrid systems. DaimlerChrysler plans to use the new hybrid system in its 2008 Dodge Durango sport utility vehicle. GM will use the hybrid in versions of the Tahoe and Yukon SUVs it plans to make available at the end of 2007.

BMW has not committed to a timetable for using the new engine system, but has said that it will make vehicles available with the upcoming hybrid engine system over the next three to five years. Truckenbrodt and representatives of both GM and BMW said a collaborative development effort on an expensive emerging technology such as hybrid transmissions would become increasingly common in the auto industry as companies look to share such costs.

"It's an expensive venture," said Larry Nitz, executive director of GM's global hybrid powertrain development. "But working together not only shares the cost but improves the (product). Working together we were able to pick the highest bar."

GM is currently considering an alliance with Renault-Nissan that could include shared development efforts and other collaboration that has been urged by the automaker's largest individual investor, billionaire Kirk Kerkorian. Eventually, alliances hold the key in the auto industry.