BMW-PSA hybrid deal a tilt at industry dominance

There's no doubting that BMW Peugeot Citroën Electrification will end up a major force in the move to hybridisation

BMW and PSA Peugeot Citroen have signed a deal setting up a joint venture company to develop and share hybrid powertrains, heightening speculation of an eventual full merger between the two.

The move follows a memorandum of understanding signed in October 2010 aimed at expanding their joint work on IC engines to move into hybrid systems. With both partners confident that the MOU will be ratified by European competition authorities, its fruit will appear in products wearing BMW/MINI, Peugeot and Citroen badges from 2014.

The pair has been sharing technology for five years, since BMW shifted to PSA-sourced petrol and diesel engines for its second-generation MINI lineup. Between 2006 and 2010, the partnership yielded more than 1.8 million units, shared between MINI, Peugeot and Citroen models.

Last year came the next phase in a relationship growing ever closer with an announcement that the two would start work on a new generation petrol four, jointly designed and developed from scratch to meet Euro 6 emissions demands.

The new 50:50 joint venture allows two of Europe's biggest automotive names to utilise massive economies of scale to develop and manufacture hybrid drivetrain hardware and software, from battery packs through motors, generators, chargers and management systems. No one's talking about the cost of the deal to date beyond stressing that it's a neat 50:50 split. But spokespeople have said more will be revealed at the Geneva Motor Show in March.

The deal gives BMW a fast track into hybrid technologies using both petrol and diesel engines. To date, the Bavarian company has been cautious in its moves towards electrification, concentrating instead on extracting everything it can from internal combustion systems via its EfficientDynamics program. PSA, meanwhile, is leading the way to electrification and hybridisation among European manufacturers.  First, a deal with Mitsubishi saw the Japanese company's i-MiEV turn up in 2010 wearing a Peugeot iOn badge. Later this year the company will deliver the first mass market diesel hybrid package with the launch of a diesel hybrid Peugeot 3008.

It's an ambitious program with a goal, as described in the joint press release "…to create an open European platform on those technologies that will help the European industry to structure itself in the field of hybridization. To that extent, the joint venture will both integrate suppliers by outsourcing development work and could sell hybrid components to other companies beside its two shareholders."

The Times reports the deal has fuelled a rise in long-standing speculation about an eventual merger. However it stresses that any such arrangement is some way off yet, with both being subject to hard controlling family interests -- the Quandt family in Bavaria and the Peugeots in Paris. But it also suggests that Thierry Peugeot has shown signs of softening up on questions of individual family control of any such future conglomerate.

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