Thanks to rising development costs, greater market fragmentation, and the need to invest in both electric vehicles and self-driving car technology, automakers are increasingly coming together to share development costs and increase economies of scale.
Sources from both sides have told Handelsblatt the companies have discussed jointly developing a new front- and all-wheel drive platform.
If the two companies do agree to collaborate on a new front-wheel drive architecture, it could face stiff internal opposition, especially from their respective engineering departments, a lot of press and, potentially, regulatory scrutiny from the European Commission.
Even with a green light, the new platform would probably only debut in 2025 at the earliest, as Mercedes-Benz has begun rolling out all the different permutations and combinations based on the latest A-Class, while BMW is busy preparing its first front-wheel drive 1 Series hatch.
While the optics of such a deal may stop it from ever occurring, the two luxury automakers are discussing a number of other partnerships,
These including sharing patents and working together on self-driving vehicle technology, and joint procurement of electric vehicle batteries and transmissions.
Should any of these come to be, it won't be the first time the two have worked together. They recently gained regulatory approval to merge their online mobility services, while in 2015 Audi, BMW, and Daimler teamed up to purchase Here maps from Nokia.