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Italian magazine Quattroroute is reporting that Fiat is hard at work on a new hybrid system for smaller cars and it is prepared to share the system with Chrysler. The system could appear in the tiny 500 and the upcoming Topolino paired up with Fiat's new 900cc two cylinder turbocharged engine. The hybrid transmission integrates the electric motor/generator and the system uses lithium ion batteries. Fiat is apparently also designing the system with the intent of adding plug-in capability.