You have probably heard of some chatter about a possible partnership between BMW and Toyota in regards to environmentally-friendly technologies.

Well looks like there was substance behind the rumors after all and both companies have announced a collaborative effort today. A memorandum has been signed between the two auto brands which will see BMW supply Toyota’s European division with the company’s 1.6 liter and 2.0 liter diesel powerplants in 2014.

“It is a great joy and a thrill to enter into this mid-to-long-term collaborative relationship with BMW, a company with its own culture and history from its many years of car manufacturing in Europe, and a company that makes cars that are fun to drive. In the spirit of contributing to furthering the development of the auto industry and society, both companies will bring their wide-ranging knowledge-starting with that concerning environmental technologies-to the table and make ever-better cars,” said Akio Toyoda, Toyota’s president.

BMW’s Chairman of the Board of Management Norbert Reithofer said, “Toyota is the leading provider of environment-friendly series technology in the volume segment and the BMW Group is the most innovative and sustainable manufacturer of premium automobiles. We are now joining forces to further develop environment-friendly technologies and to expand our innovation leadership in each of our segments.”

“Supplying Toyota with our fuel efficient and dynamic diesel engines represents another important step in the planned expansion of our sales activities for engines and powertrain system,” he added. This deal is part of a memorandum which covers collaborative research into next generation environmental friendly technologies, such as lithium-ion battery technology.