BMW and PSA Peugeot Citroën are setting up a 50-50 equity joint venture named BMW Peugeot Citroën Electrification to focus on developing and producing hybrid components, including battery packs, E-machines, generators, power electronics and chargers, while also developing software for hybrid systems.

Joint research and development, production and component purchasing will leverage significant economies of scale for both companies, the pair said in a statement. The agreement was signed on 1 February and followed an October 2010 memorandum of understanding to expand their existing (petrol engine) cooperation to hybrid systems.

The JV aims to develop standard hybrid components for the electrification of their vehicle ranges. Its goal is also to create an open European platform on those technologies that will help the European industry to structure itself in the field of hybridisation. 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.

Subject to approval by the relevant competition authorities, the joint venture is expected to launch operations in the second quarter of 2011. The new hybrid components will equip both partners’ vehicles from 2014 onwards.

The joint venture’s management, as well as the rest of its workforce, will be drawn from employees of both companies. Additional external staff will also be hired. The key management positions will be equally shared among the two companies. Wolfgang Güllich, currently responsible for BMW purchasing, will be appointed CEO and Jean Leflour, currently heading PSA’s customer satisfaction and quality planning will be managing director.

BMW and PSA have cooperated on engines for several years, building together around 1.8m units from 2006 to 2010. In February 2010, the two companies agreed to develop the next generation of their jointly designed I4 petrol line which will also meet EU6 requirements. The joint engine is currently fitted to Mini, Peugeot and Citroën models.