DaimlerChrysler AG has taken the first tentative step to distance itself from hybrid development partners – and rivals – General Motors Corp. and BMW AG.

Calling themselves the Global Hybrid Cooperation, the auto makers joined forces to accelerate their respective hybrid-development programs against a backdrop of growing consumer interest and continued advancement by technology frontrunners Toyota Motor Corp., Honda Motor Co. Ltd. and Ford Motor Co.

Together, DaimlerChrysler, GM and BMW created the “Two-Mode Hybrid” system. But, fearing the name oversimplifies the technology, DaimlerChrysler has adopted its own nomenclature.

“Making (names) understandable to the public is always one of the challenges,” says Mark Chernoby, Chrysler Group vice president-advanced vehicle engineering.

“We have now started using the term ‘multi-mode,’ Chernoby says. “The reason being, we are trying to describe to the media and the public that this is something different.”

Neither BMW nor GM are wed to the “Two-Mode” moniker, Ward’s is told. But GM appears slightly more committed because “we have a lot of equity in it,” a spokesman confides.

Like conventional hybrid set-ups, the Two-Mode system supplements the performance of an internal combustion engine with electricity. In addition, however, it closely monitors and adjusts gear ratios to further ensure maximum operating efficiency is maintained.

While the system features a planetary gear set, “it’s sort of an electric version of a CVT (continuously variable transmission),” Chernoby tells Ward’s in an exclusive interview.

“It helps provide more fuel efficiency for the customer in something other than just a city cycle. That’s the whole focus – providing a broader operating range than what some of the hybrids are doing today,” he says.

Current hybrid technology also is limited to small and midsize cars and SUVs. Stakeholders in the Global Hybrid Cooperation say their powertrain is better suited to large vehicles and will outshine competitive systems on highways, where today’s hybrids suffer in contrast to their performance in stop-and-go driving.

While BMW has not revealed its first application for the Two-Mode Hybrid, GM has said it will debut the system on vehicles shouldered by its new GMT900 platform for fullsize SUVs and pickups, starting with the ’08 Chevrolet Tahoe and GMC Yukon, followed by the Cadillac Escalade.

Meanwhile, Chrysler has said it will unveil the “multi-mode” technology on a Dodge Durango SUV. It is expected to bow in 2008.

“Some of the other competitive hybrid systems, the way they’re (engineered), tied to a small engine, etc., they don’t necessarily provide towing capability for the customer,” Chernoby notes. “That’s one of the points with this technology. It does allow the opportunity to put it on a vehicle like the Durango, where there’s a percentage of your customer base that wants that capability.”

Even though consumer appeal is well documented, evidenced this week by a Consumer Reports survey that says 50% of prospective vehicle buyers are contemplating hybrids, Chernoby is tight-lipped about other Chrysler hybrids.

“This technology is adaptable to other vehicles of similar north-south architecture,” he allows.

Sources tell Ward’s a hybrid Aspen SUV is on the drawing board at Chrysler. A conventionally powered Aspen will arrive in showrooms this fall as the first Chrysler-badged SUV – and it will share a platform with Durango.

Both vehicles will be built at Chrysler’s assembly plant in Newark, DE, which also is the site of hybrid Durango production.

Chrysler is focused on hybrid-technology development, Chernoby says, but not at the expense of other potential solutions to rising gasoline prices.

The auto maker’s plan for the U.S. market is to sell, by 2008, 500,000 vehicles capable of burning E85 (ethanol/gasoline mix). Measured against the current size of the auto maker’s U.S. fleet, that’s 25%.

“We continue to see diesels as an opportunity in the United States,” Chernoby adds. “That’s why we launched it in the Jeep Liberty.”

While the auto maker never revealed sales targets, it claims deliveries of the Liberty CRD (common-rail diesel) exceed expectations.

“There are challenges from an emissions perspective,” Chernoby says, referring to future diesel rollouts. Pending regulations are more restrictive, he adds.

But these barriers are no less formidable than the stigma diesels have among U.S. consumers, who recall the noisy, soot-spewing incarnations of years past.

“We have to find a way to gauge market acceptance, Chernoby says. “The jury is still out on that. We’ve got, as an industry, to come up with ways of meeting future emissions requirements in a very cost-effective manner so we can supply the right value to the consumer.”

Chernoby is mum on Chrysler’s plans for introducing a diesel-powered light-duty pickup – something CEO Tom LaSorda hinted at recently.

“There are plenty of opportunities out there. We’re obviously going to look at the ones that we think are going to be right for the market and right for us as a company, strategically, to implement.”

Chrysler also is preparing for the dawn of a hydrogen-based economy, still decades away by some estimates. But the auto maker is undeterred, pursuing fuel-cell research as the national average price for a gallon of gas appears ready to reach $3.

“There really hasn’t been any shift in the past 24 months, either speeding up or waning,” Chernoby says. “We’ve got a pretty regimented process put in place. We have the most (fuel-cell) vehicles of any OEM running around the world right now, gaining real-world experience.”

Just this week, the collective odometer on DC’s fleet of fuel-cell cars, vans and buses rolled past 1.2 million miles (2 million km).

When Chrysler pulled the sheet off a B-car concept, the Dodge Hornet, at this year’s Geneva auto show in March, it stirred speculation the auto maker is poised to make another play for the increasingly frugal car buyer. But Chernoby is cautious.

“We’re all looking for the magic white space,” he says, referring to untapped market potential.

“There’s a certain level of sales volume in that size car here in North America,” he says. “Will that change in the future? Your crystal ball is as good as mine.

“In North America, size matters. Clearly, the U.S. customer has shown a purchase decision-making process where they buy size relative to what they can afford.

“They’ll buy size all day long,” Chernoby adds. “The question is, with fuel prices going up, are they going to change? I don’t know. We always want to be ready.”

emayne@wardsauto.com