Geneva: BMW and PSA Peugeot Citrogen said they aimed to be European leaders in components for hybrid and electric cars — a technology that is gaining momentum as oil prices rise.

The two carmakers will produce components for hybrid and electric cars at Peugeot's plant in Mulhouse, France, and conduct research and development at BMW in Munich, their chief executives said on the eve of the Geneva motor show as they fleshed out details of a partnership they agreed last month.

Hybrid and electric cars and their parts are emerging as a main battleground technology for carmakers, and one in which Asian producers including Toyota and Nissan have been leaders.

Didier Leroy, head of Toyota in Europe, said that sales of hybrids by the Japanese carmaker and its Lexus premium marque would account for 20 per cent of its total sales in Europe by 2013, up from 9 per cent now.

Wonderful news

"This is wonderful news for us," Leroy said of news on the BMW-Peugeot partnership. "The more we will have competitors on hybrid, the more hybrid technology will be known by the customer."

The new partnership will develop hybrid components for front wheel drive small cars and develop software for hybrid systems.

BMW and Peugeot said it would be expanded later to include components such as high-voltage storage, electric engines and chargers.

The two companies said they planned to invest an initial €100 million (Dh502.79 million) in the partnership, and that they planned to sell hybrid components to other carmakers.

Philippe Varin, Peugeot's chief executive, said the tie-up represented "a key move for creating a European leader in hybrid technologies".

Norbert Reithofer, BMW's chief executive, said: "With two automakers intending to co-operate closely in this field, we are sending a clear signal for Europe."

The two companies said they planned to launch their partnership in the second quarter of this year, pending approval of competition authorities.

The venture could employ about 400 people by the end of 2011.

Varin said he expected hybrid and electric vehicles to account for 15 per cent of the market by 2020.

Peugeot's chief said the French producer — which introduced two electric cars, the Peugeot Ion and Citrogen C-Zero, last year — expected to be producing 40,000 pure electric cars and vans a year by 2014. The French group is also launching diesel hybrid versions of its Peugeot 3008 and Citrogen DS5 models this year, and will begin selling a hybrid version of Peugeot's 508 next year.