It was reported over the weekend that the two were in talks for a partnership on "green" vehicles, with BMW set to provide the Japanese firm with diesel engines.
BMW declined to comment.
Details of the partnership are expected to be made known in the middle of this week, according to media reports.
Toyota earlier on Tuesday unveiled a plug-in Prius hybrid car with high-capacity lithium-ion batteries ahead of the Tokyo Motor Show, touting it as the world’s most practical green car.
Stricter laws governing greenhouse gases, depleting fossil fuels and the rising price of crude oil are pushing carmakers across the world to roll out new zero-emission cars that can run entirely on electricity.
Since an electric car often costs twice as much to buy as a conventional car powered by a combustion engine, researchers are searching for a way to make the lithium-ion lighter and less expensive.
