Through the deal, the companies will subsidize the AOL service to GM's 200,000 employees and DaimlerChrysler's 100,000 employees in the United States.
Early next year, when the program launches, employees will be able to choose from three different services, including AOL home access for $3 per month or AOLTV for $5 a month, which includes a Philips set-top box. Both services regularly cost $21.95 a month.
The companies are also partnering with Hughes Electronics' DirecTV to offer its interactive TV services for $31.95 per month; this package will include AOLTV with the Philips set-top box.
"Improved Internet access is good for our people and good for our business," GM president Rick Wagoner said.
"This is all about speed, flexibility and offering our employees three great technology options that will assist them in juggling the demands of work and home in the Internet age," he added.
In a separate deal, DaimlerChrysler and GM said Thursday that they have partnered with Workscape, a Reston, Va.-based provider of human resource portals, to develop online portals for their respective employees. The portals, available at home or work, will let staff members find and update information on a range of topics including career planning, retirement savings, continuing education and health benefits.
Workscape is working with technology companies Hughes, Sun Microsystems, iPlanet and Philips Electronics to develop these services.
Financial details of the agreements were not disclosed.
Under the AOL deal, employees who already subscribe to AOL will not be permitted to switch to the low-cost program, but family members may sign up under the new agreement. GM said that about 75 percent of its employees have home computers.
Merrill Lynch financial analyst Henry Blodget said the deal is significant for AOL because it increases the company's subscriber numbers and moves "the (online) medium closer to becoming a 'must-have' utility for the mass consumer market."
The online giant is also strengthening ties to the auto industry and strong traditional companies, Blodget wrote in a report.
"The incremental subscribers, moreover, will obviously lead to additional advertising revenue (for AOL). If AOL were able to sign up new accounts for one-half of the employees, we estimate that the deal could be worth ($30 million to $40 million) annually in new revenue," he added.
The move signals growing interest in improving the relations and lifestyles of employees. Competing automaker Ford Motor, in conjunction with the United Auto Workers, unveiled a similar initiative in February for its employees, giving away free personal computers and low-cost Internet access to staff members.