A German newspaper is reporting BMW and Mercedes-Benz are in active discussions that could see them both work together to develop the next-generation 1 Series and A-Class.
As well as co-developing both hatches, the two German car giants are also considering sharing the cost of developing autonomous cars, to help both BMW and Mercedes keep up with the unprecedented spending spree new tech giants like Waymo are enjoying, says newspaper
.Sharing the high cost of development would involve the funding of a new small car architecture that could reportedly see both BMW and Mercedes saving billions in R&D.
Speaking to an insider said to be close to the negotiations between both car-makers, the first compact car set to be born of the unprecedented union between BMW and Mercedes will arrive in 2025.
That date would coincide roughly with the introduction of the next-generation Mercedes A-Class.
Helping the alliance to develop a compact hatch is BMW's decision to switch to front-wheel drive for the next-gen 1 Series.
Currently, according to the newspapers, the most vocal opposition to the alliance on both sides is from the car-maker's own engineers.
Until now, Mercedes and BMW cooperation has been limited, teaming up in 2015 to share mapping technology and, more recently, merging Mercedes Car2Go with BMW's DriveNow short-term rental business.