TRAVERSE CITY, MI – The possibility of General Motors Corp. teaming up with Renault SA and Nissan Motor Co. Ltd. has garnered global headlines, but another revolutionary partnership between GM and archrivals BMW AG and DaimlerChrysler AG is proceeding almost unnoticed.

The auto makers have been collaborating for the past 18 months on the development of a new type of hybrid propulsion system they say is superior to Toyota Motor Corp.’s Hybrid Synergy Drive.

While likely smaller in size and scope than linkups being considered between GM and the Renault-Nissan Alliance, the venture hardly is insignificant.

On Friday, officials here at the Management Briefing Seminars confirmed they are jointly spending more than $300 million on core development efforts and will spend more than a $1 billion total bringing their respective powertrains to market by the end of the decade.

The cooperative’s officials say the GM/DC/BMW design is more economical than current HEVs in highway driving and better suited to applications in trucks and big, powerful sedans.

The so-called dual-mode hybrid system fits into a conventional transmission housing and can be scaled in size to accommodate many different vehicles and engines configurations, from rear-drive and front-drive to all-wheel drive.

The system will debut on the Chevrolet Tahoe and GMC Yukon at the end of next year and the Dodge Durango in early 2008. Plans for a Chrysler Aspen hybrid are under review. BMW and DC’s Mercedes-Benz unit say it is too early to talk about their applications.

The nucleus of the co-development effort is a facility in Troy, MI. It currently houses 500 engineers, and that number is expected to increase to about 600 during the next year.

Andreas Truckenbrodt, executive director-hybrid powertrain programs at DaimlerChrysler, says development is focused in North America because it is the largest hybrid market. A Midwestern location was chosen because it is the area with the highest number of automotive suppliers.

Troy, a suburb north of Detroit, was chosen specifically because it is centrally located between the engineering development centers of GM in Pontiac and Warren, MI, and the Chrysler Technical Center in Auburn Hills, MI.

Asked what the biggest challenge so far has been to the collaboration, panelists suggest it was dealing with boundaries between where the core technology development efforts end and proprietary efforts begin.

dwinter@wardsauto.com