http://rumors.automobilemag.com

Volkswagen usually spins its diesels (namely the Jetta TDI) as alternatives to hybrids. However, with just about every other carmaker offering a hybrid (VW's first hybrid, the Touareg hybrid, is not due out until late 2009/early 2010), the peer pressure is heavy on VW to offer a few of its own. Thus VW is looking to partner with China's BYD, maker of the world's first mass-produced plug-in hybrid.

BYD and VW signed a memorandum of understanding earlier this week. According to a VW press release, the goal is to "explore the options for partnership in the area of hybrids and electric vehicles powered by lithium batteries."
        The agreement will be open ended. According to Christian Buhlmann, a VW spokesman, his company is looking at both battery-only and plug-in hybrid cars. He said it is hard to say when the cars will be introduced. "The big question is when do batteries become affordable?"
        VW is working with multiple battery suppliers such as Sanyo and Toshiba. Buhlmann said the reason is "because we have a lot of experience making cars, but we're a newcomer when it comes to battery technology."
       One of the company's main interests is extended-range hybrids because they offer 30-40 miles of range using only the batteries. "With traditional hybrids, you have a few miles of electric range and then for the rest of the journey you're carrying around a lot of batteries that are heavy and of no use," Buhlmann said.

Source: The New York Times