Last year BMW and Fiat first started looking at cooperation over parts and platform sharing and possibly sales and distribution synergies, but with Fiat aligning itself with Chrysler earlier this year the scope of its workings with BMW have widened. Though exact details remain scarce, BMW and Fiat are reportedly working on a new range of fuel-efficient models together with Mini.

Both companies are desperate to reduce their fleet-average CO2 emissions and fuel-consumption levels in light of toughening standards being implemented in the U.S. and Europe. The common solution is to expand their respective lineups with ultra-frugal petrol and diesel minicars as well new zero-emissions electric vehicles.

The cars themselves will resemble compact hatchbacks with rear-mounted powertrains and seating capacity for four adults. A wheel-at-each-corner design should ensure sporty handling and stability, while lightweight construction methods and plenty of plastic bodywork should keep weight down.

BMW’s is expected to revive the Isetta name for its new vehicles, while Fiat will use the Topolino nameplate – both of which are speculated for a return. AutoExpress reports the first car will be on sale by 2011 and will be grouped under the Mini brand, with the BMW and Fiat versions to arrive one year later.

We’ve already had the first taste of the upcoming electric vehicles in the form of the Mini E, which was unveiled at last year’s Los Angeles Auto Show and is currently being leased to customers in the U.S. and eventually Germany. Our second glimpse is expected to be at this September’s Frankfurt Motor Show, where a rumored concept vehicle will make an appearance.