Aug. 11 (Bloomberg) -- General Motors Corp., DaimlerChrysler AG and Bayerische Motoren Werke AG will spend more than $1 billion combined to jointly develop a gasoline-electric motor for hybrid vehicles that will compete with Toyota Motor Corp.

``It costs a lot of money, and we're sharing resources,'' Andreas Truckenbrodt, executive director of DaimlerChrysler's hybrid program, told reporters yesterday in Traverse City, Michigan, after announcing the investment.

GM, BMW and DaimlerChrysler are making their push a decade after Toyota began selling Prius cars. Toyota spent $2 billion on hybrid research in the 1990s, some company officials have said, and has since sold more than 600,000 of the gasoline-electric models. Honda Motor Co. is quadrupling production of the fuel- efficient cars in Japan.

``Toyota and Honda have a competitive edge,'' said Fumiyasu Sato, chief executive officer at Milestone Asset Management, a Tokyo-based investment adviser. ``It's not going to be easy for other companies to catch up.''

The investment includes at least $300 million to develop hybrid transmissions, Truckenbrodt said. The expense also includes $118 million to retool a GM plant in Baltimore so the transmission system can be built there. That upgrade was announced in February.

Toyota Patents

Toyota has licensed hybrid patents to Ford Motor Co., supplies components to Nissan Motor Co. for a gasoline-electric Altima sedan that goes on sale in 2007, and plans to work with affiliate Fuji Heavy Industries Ltd.'s Subaru on hybrid vehicles.

GM suffered its first annual loss since 1992 last year after giving up market share to Toyota and Honda as customers chose smaller, fuel-efficient cars such as Toyota's Corolla over sport- utility vehicles like GM's TrailBlazer. GM also is in talks with Renault SA and Nissan about an alliance that may include joint product development.

BMW, the biggest luxury car brand, joined the hybrid project last year. It was first announced in December 2004 by GM, the world's largest carmaker, and DaimlerChrysler, No. 5 globally. The three companies had previously declined to disclose investment amounts in their hybrid partnership.

Toyota President Katsuaki Watanabe has said the Toyota City, Japan-based company is working to halve the cost of its hybrid components.

$3,000 Cost

Gasoline-electric hybrid vehicles save fuel and reduce emissions by combining a gasoline engine, a battery pack and brakes that capture energy from stopping. The components add about $3,000 to the retail price of such vehicles.

GM, DaimlerChrysler and BMW have said sharing development expenses will allow them to produce hybrids less expensively than would be possible working alone.

``The original concept was the three partners were going to have a much lower cost system,'' said Thad Malesh, an Automotive Research Group analyst in Moorpark, California. ``Everybody knows how aggressive Toyota is on cost reduction, so it's not clear how much advantage'' the partnership will provide, he said.

``There are multiple hybrid systems under development together,'' said Larry Nitz, head of GM's hybrid program. ``It's a family of products.''

The automakers are developing rear-wheel-drive systems for cars and trucks and a third for front-wheel-drive models, Nitz said.

First New Models

The first models using the technology will be versions of GM's Yukon and Tahoe SUVs, due in 2007, Nitz said. Chrysler, DaimlerChrysler's U.S. unit, will sell a hybrid Durango SUV in 2008, followed by BMW models within three to five years, the companies said.

Toyota plans to sell 1 million hybrids annually after 2010, with at least 600,000 bought in the U.S. Honda said in May that it will add a low-cost hybrid by 2009 that will have sales of 100,000 units a year in the U.S. and as many as 200,000 globally.

Ford, the world's third-largest automaker, in June dropped a goal of selling 250,000 hybrids a year in the U.S., more than 10 times its current volume. The automaker said it would focus on making vehicles that run on alternative fuels such as ethanol.

Shares of Detroit-based GM fell 50 cents to $30.11 at 4 p.m. in New York Stock Exchange composite trading. They have risen 55 percent this year. Toyota's U.S. shares fell $1.90 to $107.47. Stuttgart, Germany-based DaimlerChrysler's U.S. shares fell 48 cents to $50.69. Shares of Munich-based BMW rose 8 cents to 38.99 euros in Frankfurt.

To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

Last Updated: August 11, 2006 16:13 EDT