The fact that DaimlerChrysler and General Motors will soon be selling vehicles with a hybrid system that's superior to anything on the road today from Ford, Honda, or Toyota pretty much got lost in media coverage of the competitors' announcement of their decision to work on a common two-mode system.

Also lost in the clamour about the two companies having changed their minds about the importance of hybrids is that the hybrid technology that currently exists is already outdated and will likely be gone in a couple of years.

But for consumers willing to spend more for hybrids so they can reduce their fuel use, the most important points coming out of the announcement by DCX and GM is that they'll be offering a system that's less expensive, more fuel-efficient and more versatile.

DCX and GM agreed to work together after discovering that they were both working toward the same end -- the "two-mode" full hybrid system. Joining forces made sense for the two firms, since developing a system like this is one of the most expensive undertakings in the car industry.

On top of that, the economies of scale involved with using variations on a common theme across different cars might actually allow them to make money on a hybrid, which is not an easy task. Toyota is believed to be selling each Prius for more than it costs to build, for example, but that doesn't begin to recover the huge research and marketing costs involved.

The primary appeal of GM's Advanced Hybrid System 2 (AHS2) to the companies involved is clearly its versatility. GM's group vice-president of power train, Tom Stephens, says "the ability to offer a common full hybrid architecture with the flexibility to configure in rear-, and front-wheel-drive packages, for both gasoline and diesel engines, gives us the best opportunity for expanding the technology globally."

The first use of the two-mode hybrid system will come late in 2007, inside the Chevrolet Tahoe and GMC Yukon full-size SUVs. Some time after that, it will appear in the Dodge Durango.

When combined with technologies like Displacement on Demand, says Stephens, AHS2 will enable the V-8-powered SUVs to deliver a fuel efficiency improvement of at least 25 per cent.

"Significantly, large economy gains are realized in urban driving, the type of daily commuting, stop-and-go driving that is the most common driving scenario of these vehicles," he adds. "AHS2 also delivers the acceleration capability expected of a full-size SUV, whether in the city or on the highway."

Though GM has more than 60 patents filed or in progress on what Stephens calls "critical new technology" for AHS2, he also makes it clear that GM is anxious to share the system with other partners if they're interested. More scale means more economy, after all.

Stephens was quick to point out that people should not interpret GM's increased interest in hybrids as a diminution in the company's dedication to fuel cells. "Long term, GM is committed to delivering commercially viable fuel cell technology."

Stephens says a two-mode system allows for more compact packaging because its compact and powerful electric motors are designed to fit within the approximate space of a conventional automatic transmission, which is "an efficiency advantage compared with today's typical single-mode systems that rely on much larger electric motors."

This is the "optimal merging of full hybrid and state-of-the-art automatic transmission technologies," Stephens says. "The system is essentially an electrically variable transmission with two hybrid drive modes. Single-mode systems can't provide the range of operating efficiencies that our two-mode system can. Our system reduces fuel consumption at highway speeds much more effectively."

Compact and powerful electric motors are integrated into the transmission and work with traditional transmission gears and electronic controls to provide two modes, or ranges, of infinitely variable gear ratios. The input split mode is used for launching the vehicle from a stop, driving at low speeds and providing better performance and moderate load trailer towing. The compound split mode is used primarily when the vehicle is at higher speeds to provide efficient cruising.

"The AHS2 drive modes alternate seamlessly between the input split mode and a compound split mode," Stephens says. "In the input split mode the vehicle can operate on electric, mechanical or a combination of the two. The vehicle operates as a full hybrid when the engine is shut off at low speed and light loads, as leaving the engine off for extended periods of time and moving under electric power is key to reducing fuel consumption in stop-and-go traffic."

As complicated as the technology is, "it all happens without the driver realizing it," says Larry Nitz, executive director of GM's hybrid program. "AHS2 simply optimizes power and torque for the given driving conditions, and all the driver feels is the satisfaction of low fuel consumption and the exceptional reserve power and performance."

The addition of a second mode to the drive system improves efficiency and reduces the need for the "exceedingly large electric motors" that are typical of today's single-mode systems, Nitz says.

"Typical single-mode systems depend on large electric power loops between two large electric motors, resulting in inefficiency and ultimately less continuous power," Nitz says. "AHS2 delivers seamless, dependable power on demand and in a more efficient power flow -- and is packaged with motors less than half the size of single-mode systems."

A sophisticated controller determines when the vehicle should operate in either mode of the two-mode drive system, Nitz explains.