GM and DaimlerChrysler Join Forces to Develop Two-Mode Full Hybrid
Propulsion System

## Cooperation on joint development for applications in rear- and front-wheel-drive cars, trucks and other vehicles 

## Two-mode full hybrid drive system will have unique applications for each company's vehicles

## Memorandum of Understanding signed today targets a binding, definitive agreement early next year

DaimlerChrysler AG (DCX) and General Motors Corporation (GM) announced a
cooperative effort that will advance the state of hybrid technology to
benefit their customers, and the environment.

The companies plan to work together to develop a two-mode full hybrid
propulsion architecture for applications in GM, Chrysler Group and
Mercedes Car Group vehicles. Variants planned include rear- and
front-wheel-drive versions for cars, trucks and other vehicles. This
technology is expected to improve acceleration performance while also
improving vehicle fuel economy and range significantly.

GM and DaimlerChrysler Corporation have signed a non-binding "memorandum
of understanding" and intend to enter into a definitive agreement in
early 2005.\
\
Both companies have been working independently on their own hybrid
propulsion systems for their range of passenger vehicles.

GM previously announced its first application of a full hybrid would be
launched in late 2007 in two of GM's most popular full-size SUVs, the
Chevrolet Tahoe and GMC Yukon. Combining the hybrid development efforts
of DaimlerChrysler and GM will position both companies for leadership in
this technology. The wide-ranging program will allow opportunities for
additional partners, and could become a hybrid source for other auto
manufacturers.

"The performance, fuel economy and more efficient packaging of the
two-mode full hybrid allow applications to a broad spectrum of vehicles
and driving cycles," said Tom Stephens, group vice president of GM
Powertrain. "We believe it is the most efficient full hybrid design for
any vehicle configuration."

"Our planned cooperation will draw on the technical expertise of two of
the largest auto companies in the world," said Dr. Thomas Weber,
DaimlerChrysler Board of Management member with responsibility for
Research and Technology and Development Mercedes Car Group. "The result
is expected to be a series of strong hybrid propulsion systems that will
serve as a solution for our alternative powertrain needs."

Mercedes-Benz will focus on high-tech hybrid propulsion systems in
rear-wheel drive passenger cars in the luxury segment. Hybrid technology
will be an integral part of its advanced powertrain strategy within the
next several years, Dr. Weber added.\
\
"The team members that will develop the hybrid system will be located in
Michigan, but will come from all over the world," said Eric Ridenour,
executive vice president of Product Development -- Chrysler Group. "A
world-class hybrid system will complement the global fuel economy
benefits that DaimlerChrysler offers customers through technologies such
as cylinder\
deactivation -- Chrysler Group's Multi-Displacement System \-- and
modern diesel engines." Chrysler Group will offer a range of hybrids,
but its first application of this system will be in the Dodge Durango
shortly following the GM SUVs, added Ridenour.

The development of a common hybrid propulsion architecture is the basis
of the cooperation, while retaining the distinctiveness in feel and
performance for the GM, Mercedes Car Group and Chrysler Group brands.
The two-mode full hybrid drive system will be mated to different engines
and the respective vehicle programs will have unique performance
dynamics and calibration. Each company will integrate the two-mode full
hybrid into its own vehicles.

Today's typical single-mode systems rely on much larger electric motors
than are needed in the patent-protected two-mode system. The two-mode
system innovations provide performance and fuel economy improvements at
highway speeds and better trailer towing ability. Packaging is more
efficient than today's single mode designs as the system's compact and
powerful electric motors are designed to fit within the approximate
space of a conventional automatic transmission.

"The two-mode design is the optimal merging of full hybrid and
state-of-the-art automatic transmission technologies," added Stephens.
"Together we will jointly develop what is essentially an electrically
variable transmission with two hybrid drive modes. This system will
reduce fuel consumption at highway speeds much more effectively than
available single mode systems and achieve at least a 25 percent
improvement in composite fuel economy in full-size truck applications.
In the near term, GM will also continue to expand its offerings of
six-speed transmissions and engines equipped with advanced technologies
such as variable valve timing and Displacement on Demand."