TOYOTA & BMW DISCUSSING A BROAD PARTNERSHIP IN ENVIRONMENTAL VEHICLES.

BMW AG and Toyota Motor Corp plan to form a partnership to develop lithium-ion batteries for electric cars, a person close to the industry told Dow Jones Newswires Tuesday.

The batteries could be used for the next generation of electric cars produced by the companies and the partnership is likely to be announced this week, the person said.

Batteries for BMW's i3 model, to be launched in 2013, are produced and supplied by a joint venture between Robert Bosch GmbH and Samsung.

Contrary to some media reports, the partnership doesn't include wide-ranging cooperation on hybrid technology, though BMW will deliver diesel engines to Toyota, the person added. Toyota aims to increase its European market share by using such engines.

It is expected that TOYOTA will look to use BMW’s 2.0 litre diesel engines a number of its European – market models.

In February, BMW announced a hybrid technology partnership with PSA Peugeot Citroen (UG.FR) to develop and produce systems including high-voltage storage, electric engines and generators, as well as electronics and loading devices. The two companies invested a total EUR100 million in the venture.

The PSA deal will not be affected by the new partnership with TOYOTA, which is

expected to be announced at this week TOKYO MOTOR SHOW.

In the coming year, BMW will unveil production versions of its i3 electric vehicle and i8 hybrid sports car, while reports suggest that an i4 coupe & i5 sedan will follow