By Christoph Rauwald
Of DOW JONES NEWSWIRES
FRANKFURT (Dow Jones)--Volkswagen AG (VOW.XE) said Monday that it signed a memorandum of understanding with Chinese automaker BYD Co. Ltd. (1211.HK) on exploring options for teaming-up on hybrid and electric vehicles powered by lithium batteries, the latest sign that global automakers are seeking to ramp up their presence in the area of alternative drivetrains.
"Hybrids and electric vehicles will play an increasingly important role," Volkswagen's executive board member for technical development, Ulrich Hackenberg, said in a statement. "Particularly for the Chinese market, potential partners such as BYD could support us in quickly expanding our activities."
Volkswagen said the memorandum of understanding was signed by Chief Executive Martin Winterkorn and BYD Chairman Wang Chuanfu.
In March, Wang said BYD was in talks to supply batteries to car makers in Europe and the U.S., but he didn't name them.
The Shenzhen-based company moved into the spotlight last year when a company controlled by investor Warren Buffett invested $230 million in BYD, mainly because of BYD's cost-effective technology. In December, BYD caused a stir by launching a plug-in car ahead of more established foreign rivals.
Concerns over gasoline shortages and climate change have prompted a global race to commercialize affordable electric-battery cars and plug-in hybrids that get most of their power from batteries.
Last week, Volkswagen's German rival Daimler AG (DAI) announced that it will buy a 10% stake in Silicon Valley electric vehicle startup Tesla Motors Inc. for a "a sum in the double-digit millions of euros."
Daimler and Tesla are already cooperating to integrate Tesla's lithium-ion battery packs and charging electronics into the first 1,000 electric versions of Daimler's tiny Smart two-seater. As part of a closer tie-up, Daimler and Tesla will intensify the joint development of battery systems, electric drive systems and individual vehicle projects.
While lithium-ion batteries are seen as the technology that will ultimately work, their successful use has been hindered by relatively high price, limited durability and safety concerns. BYD says it has largely resolved those issues by turning to a safer, more cost-effective technology called iron-phosphate-based lithium-ion.
Company Web site: www.volkswagen.com
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512; christoph.rauwald@dowjones.com
(Norihiko Shirouzu of The Wall Street Journal contributed to this article.)
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