GM also expects it will be able to "equal or better gas engines in terms of cost, durability and performance" once it is able to ramp up volume to at least 500,000 vehicles a year, said GM spokesman Scott Fosgard.

GM has partnered with Japanese rival Toyota Motor Corp. for a number of years on developing the experimental fuel-cell technology.

On Thursday, the automaker announced that while it will continue its tie-up with Toyota on other advanced technologies, it will no longer be sharing its fuel-cell research.

"Because of the advances we made that type of technology is passing from the research phase to development," Fosgard said.

Fuel cells produce electricity through a chemical reaction between hydrogen and oxygen, leaving water as the only by-product. They are far more environmentally friendly than the currently popular hybrid gas-electric engines which merely reduce the amount of gas needed to power the vehicle.

There are still a number of barriers to the commercialization of hydrogen-powered cars. One is the infrastructure cost of building refueling stations. Another big challenge is reducing the cost of obtaining hydrogen itself, which has to be extracted from fossil fuels, such as carbon, or from water.

The International Energy Agency has said that if conditions were right, hydrogen and hydrogen fuel cells could play key roles in weaning energy users away from oil, gas and coal.

"In the most favourable conditions, hydrogen fuel-cell vehicles would enter the market (in mass numbers) around 2025 and power 30 percent of the global stock of vehicles by 2050 -- the equivalent of about 700 million vehicles," the IEA said in a recent report.

"The oil saving would then be equivalent to some 13 percent of global oil demand, or five percent of the global energy demand."

GM and Toyota will continue to work together on technology that will help to save lives, Fosgard said.

The world's largest automakers have been collaborating since 1999 on developing safety systems and advanced technologies. The partnership was set to expire at the end of the month and has been extended to March 31, 2008, GM said.

The latest agreement covers information exchange and collaborative research in areas such as energy usage and emissions, intelligent transportation systems, vehicle infrastructure integration and vehicle-to-vehicle communications. It also allows for joint research projects in other areas.

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