Both carmakers plan to commercialise the new hybrid module within the next three years.
Both manufacturers said they will benefit from the ‘pooling of development capacity, which will make for faster commercialisation, and from improved cost efficiencies due to higher unit volumes’.
Dr Thomas Weber, member of the board of management of DaimlerChrysler responsible for group research and Mercedes Car Group development, said: "Co-operation in the field of innovative drive systems makes good sense not only from a technical but also from an economic standpoint.
“It will help to strengthen the competitiveness of two German manufacturers whose requirements in the premium segment are very similar. This is a segment where rapid commercialisation of drive technologies offering high efficiency, performance and comfort is particularly important."
Dr Klaus Draeger, member of the board of management of BMW responsible for development and purchasing: "This collaboration will allow us to broaden our technological base in the area of future hybrid drive systems for the premium class and will allow the two companies to pool their innovative resources.
“The distinct identities of the different brands will not be affected, since the relevant technologies will be tailored to fit the specific character of the different vehicles."
This new collaboration between BMW and DaimlerChrysler extends the existing cooperation at the Hybrid Development Center in Troy, USA, which began in 2005.