The companies never had a plan to create a joint venture to build fuel cells or vehicles powered by fuel cells, Executive Vice President Masatami Takimoto, who oversees fuel cell research, said in an interview last night at a dinner ahead of the Geneva Motor Show.

``We're not having any problems, challenges or confusion,'' Watanabe said of the fuel cell research. ``The current agreement with GM is set to expire at the end of March so we are now discussing a new agreement.''

Toyota, GM and other automakers are working to create vehicles that rely less on gasoline as energy prices increase and governments pass stricter laws controlling emissions. For fuel cells to be practical, companies still need to figure out how to store enough hydrogen aboard vehicles and how to produce hydrogen at a reasonable cost and without creating significant amounts of carbon dioxide, a greenhouse gas, Takimoto said.

``These cars will be ready some time after 2010 and I hope we can make it before 2020,'' Takimoto said.

Toyota, the world's No. 2 automaker behind GM, already is the largest producer of vehicles powered by a combination of gasoline and electricity. GM won't have the so-called hybrids until 2007.

GM has spent about $1 billion on research on fuel cells and plans to develop technology for a fuel-cell model by 2010 that will be competitive with gasoline models, GM Chief Executive Officer Rick Wagoner said last year.

No Joint Venture

``In the context of the technical discussions, a joint venture was never envisaged,'' Takimoto said.

Fuel cells rely on hydrogen, which reacts with oxygen to create electricity, to power vehicles. The only emission is water vapor. Hybrid systems combine gasoline engines and electric motors powered by battery packs.

In 2003, U.S. President George W. Bush pledged $1.2 billion to help automakers develop and sell hydrogen-fueled vehicles by 2020 to reduce pollution and U.S. reliance on foreign oil.

GM, which lost $8.55 billion last year, is trying to save money by developing technology with other automakers. GM is cooperating with DaimlerChrysler AG and Bayerische Motoren Werke AG of Germany to develop a hybrid system to compete with Toyota.

General Motors said on Feb. 1 that it will spend $118 million to add production of the hybrid system at a transmission plant near Baltimore. It will produce systems for each of the three automakers.

Diesel Hybrids

Toyota, which aims to sell 1 million hybrid gasoline-electric vehicles a year by 2010, will also begin selling diesel-hybrid cars after that date, Kazuo Okamoto, head of research, said in an interview.

PSA Peugeot Citroen, Europe's No. 2 carmaker, plans to release 307 and C4 compact hatchbacks powered by 1.6-liter diesel engines and electric motors in 2010 and expects to sell ``tens of thousands of them'' from the first year, Chief Executive Jean- Martin Folz said on Jan. 31.

``Our goal is to reduce the costs of gasoline-hybrids, get a lot of people driving them, and then think about diesel-hybrids,'' said Okamoto, who added that even with particle filters, diesel- hybrids would trail their gasoline-hybrid counterparts in terms of particulate and nitrogen oxide emissions.

``We still have to get the cost down on the hybrid part of gasoline hybrids, then we can apply that to diesels,'' Okamato said. ``Some time after 2010 we want to develop diesel hybrids.''

By then, Toyota should have company beyond Peugeot to compete with for buyers.

Hybrid Concept

Ford Motor Co. in January showed a concept sports car called the Reflex powered by a diesel-hybrid engine. Ford and Peugeot build diesel engines together in a joint-venture in Europe.

Porsche AG and Volkswagen AG, Europe's biggest carmaker, are partners in developing hybrid engines and vehicle electronics. The companies together build the Porsche Cayenne and Volkswagen Touareg sport-utility vehicles.

Toyota last year sold 234,945 gasoline-electric Prius hatchbacks and Lexus RX400h sport-utility vehicles.