DaimlerChrysler AG (DCX) and General Motors Corp. (GM) today announced a cooperative effort in hybrid vehicle technology.

The companies plan to jointly develop a patented “two-mode full hybrid propulsion architecture” for applications in GM, Chrysler Group and Mercedes Car Group vehicles. This technology is expected to improve acceleration performance while also improving fuel economy and range significantly, said DCX.

The two-mode design is a system that pairs hybrid technology with an advanced automatic transmission, which will contribute to improved fuel economy over currently available “single-mode” designs, the companies said.

“This system will reduce fuel consumption at highway speeds much more effectively…and achieve at least 25% improvement in composite fuel economy in full-size [pickup] truck applications,” said Tom Stephens, group vp—GM Powertrain.

“A world-class hybrid system will complement the global fuel economy benefits that DaimlerChrysler offers customers through technologies such as cylinder deactivation and modern diesel engines,” said Eric Ridenour, Chrysler Group executive vp— product development.

The joint effort between the two companies is described as a “non-binding memorandum of understanding.”

GM said its first full hybrid application would be introduced in its Chevrolet Tahoe and GMC Yukon SUVs in late 2007. Chrysler Group will release its own application in the Dodge Durango SUV shortly after, DCX said.