BMW to Build Hybrids with PSA

In a move that was long time coming, German auto maker BMW officially announced today it had partnered with French group PSA Peugeot Citroen to jointly research, develop and produce hybrid components. The 50:50 joint venture created by the two companies will be called BMW Peugeot Citroen Electrification, its creation being the natural evolution of the memorandum of understanding signed in October 2010.

The new company will be in charge with producing battery packs, E-machines, generators, power electronics, chargers and the software for the hybrid systems. The new group will hire new personnel, but instead it will also use employees of both companies.

“This cooperative venture will enable us to achieve significant economies of scale in the field of electrification. It also represents an important step on the road to sustainable mobility,” said Norbert Reithofer, BMW chairman of the board.

BMW and PSA have been working together for several years now, in four years having built 1.8 million engines together, used in MINI, Peugeot and Citroen vehicles. The new collaboration agreement between the two is expected to come into effect in the second quarter of 2011, with the products to be developed by BMW Peugeot Citroen Electrification to hit the market in their respective vehicles in 2014.

The new company also has expansion plans, saying it intends to outsource development work and could sell hybrid components to other companies.

“With this joint venture, we are sure to develop and expand our expertise and to build a European leader in the field of automotive hybrid innovation,” added Philippe Varin, PSA chairman of the board.