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Toyota’s Uchiyamada said his engineers felt comfortable dealing with their BMW counterparts

BMW and Toyota signed a memorandum of understanding to collaborate on next-generation green technologies and pool research on lithium-ion batteries.

The German premiu car maker will also supply 1.6 liter and 2.0 liter diesel engines to Toyota Motor Europe from 2014, the two companies said in a a press release.

Toyota hopes its European lineup will get a boost from the BMW engines, while for the German premium car maker, the engine agreement marks another way of generating revenue without selling its own cars.

"Supplying Toyota with our fuel efficient and dynamic diesel engines represents another important step in the planned expansion of our sales activities for engines and powertrain system,” BMW Norbert Reithofer said.

Both companies stressed the importance of their green-technology cooperation. Reithofer said Toyota leads in this area in the volume segment, while his own company plays a similar role in the premium car market.

"We are now joining forces to further develop environment-friendly technologies and to expand our innovation leadership in each of our segments," Reithofer said.

"Crucial" battery technology

Klaus Draeger, BMW's r&d chief, said at a press briefing in Tokyo that the joint research will be important for the fledgling electric-vehicle industry. "By carrying out basic research together, we want to speed up the development of battery cell technologies," he said.

Draeger termed battery technology "crucial" for the future of hybrid technology and individual mobility as a whole. "Whoever has the best batteries in terms of function, cost, and quality in their vehicles will win more customers."

Explaining the start of the cooperation, Toyota Executive Vice President Takeshi Uchiyamada said engineers at both companies started discussions in April and soon found that they had shared views on a range of issues. "There was good chemistry, maybe there was a similar culture," Uchiyamada said.

Toyota President Ako Toyoda said: "Both companies will bring their wide-ranging knowledge””starting with that concerning environmental technologies””to the table and make ever-better cars.”

Toyota declined to say which products will get BMW engines, but Toyota's European boss, Didier Leroy, said "we will be focusing on locally produced products.