BMW and Toyota have announced they will pool their resources to develop green technology – and jointly develop a sports car.

Toyota is obviously the leader in hybrid technology, but is pretty lame when it comes to diesels. Toyota also has done a lot of work on fuel cells, while BMW claims to be the world leader in developing carbon fibre for mass production.

The Chairman of BMW, Norbert Reithofer, said: "We aim to further strengthen our competitive position in sustainable future technologies. We signed an MoU [Memorandum of Understanding] to this effect today. Together we have a great opportunity to continue leading our industry through this transformation."

Akio Toyoda President of Toyota said: "BMW and Toyota both want to make ever-better cars. We respect each other. That is why we already can take the next step together." He went on to say: "Toyota is strong in environment-friendly hybrids and fuel cells ... I believe BMW's strength is developing sports cars. I get so excited thinking about the cars that will result from this relationship."

In March 2012, the BMW Group and Toyota agreed to jointly research the development of next-generation lithium-ion battery cells. In addition, BMW will supply 1.6 litre and 2.0 litre diesel engines to Toyota starting in 2014.

Where the sports car will fit is still unclear. Toyota has just introduced the GT86 at £25K, so presumably a new sports car would fit in the range above that car – based on the next Z4 perhaps?