Volkswagen and Chinese automaker BYD will work together to develop new vehicles fueled by electricity. Using VW's automotive technology, and BYD's battery expertise, the two companies hope to create a dominant force in the market.

German automaker Volkswagen and Chinese automaker BYD have agreed in principal on a partnership to develop electric and hybrid vehicles.  The two companies have been in discussions for several months, culminating with a signed "memorandum of understanding" between BYD chairman Wang Chuanfu and VW chair Dr. Martin Winterkorn.

The signing took place in Germany after a series of meetings between company representatives last week.  During the company visit, VW demonstrated many of their technologies to a BYD delegation.  Volkswagen Technical Development exec Dr. Ulrich Hackenberg led many of the talks on topics like the Golf twinDrive, and a VW electric vehicle prototype.

"Volkswagen will consistently expand its successful ‘BlueMotionTechnologies'. Hybrids and electric vehicles will play an increasingly important role, of course," said Dr. Hackenberg.  "Particularly for the Chinese market, potential partners such as BYD could support us in quickly expanding our activities."

BYD is no stranger to electric vehicles.  The company launched their plug-in hybrid F3DM at the end of 2008, the first in a series of three electric-based vehicles.  Their F3DM has an all-electric range of 100km.  Meanwhile, their midsize F6 sedan-based electric, the F6DM uses iron-phosphate batteries that take a 70% charge in just ten minutes.  BYD Auto's parent company produces 65% of all nickel-cadmium batteries used worldwide, and 30% of all lithium-ion batteries used in mobile phones.

Gallery: Volkswagen and BYD explore hybrid and electric vehicles partnership