Toyota and BMW will jointly conduct research into a lithium-air battery, which is expected to be more powerful than existing lithium-ion batteries used in many hybrid and electric vehicles, the two firms said on Thursday.
The two companies will also work on a fuel cell vehicle system, which includes hydrogen tank and motor, by 2020, they said.
"In order for FCVs (fuel cell vehicles) to become more widely used, it needs to be cheaper. That would require a great deal of time and cost for development," said Toyota vice chairman Takeshi Uchiyamada, who led development of the bestselling Prius hybrid in late 1990s.
"By bringing together the wisdom of two companies, we can aim to make FCVs more popular much quicker," he said.
Toyota said it wants to introduce around 2020 a new fuel cell vehicle using the jointly developed technology, while BMW said a launch date has not been decided. Toyota aims to start selling a fuel cell sedan by around 2015.
The two companies reiterated that they have no plans for a capital tie-up.
Toyota, the world's biggest automaker by sales, and Germany's premium carmaker BMW agreed last year to work together on fuel cells and electrified powertrains, and started researching the next-generation lithium-ion battery.
In 2011, they said BMW would supply diesel engines to Toyota in Europe from 2014.