Daimler AG's Mercedes-Benz brand and Zhejiang Geely Holding Group Co. Ltd. on Jan. 8 said they formed Smart Automobile Co. Ltd., a 50/50 joint venture for "premium and intelligent electrified vehicles."

The carmakers agreed to each invest 2.7 billion yuan in the venture, which will be headquartered in Ningbo, China.

Mercedes-Benz will design the vehicles, which will be developed with Geely's engineering network. Production will take place in China, though sales functions will be based in both China and Germany.

The 5.4 billion-yuan venture will produce pure-premium electric and connected vehicles for the B-segment, with its first product range rolling out in 2022.

Smart Automobile will be led by Geely's Tong Xiangbei, with three executives from each carmaker named to the venture's board, including Daimler director Hubertus Troska and Geely Chairman Li Shufu.

On Jan. 5, reports surfaced that Daimler was in talks with Geely's Volvo Cars brand to collaborate on combustion engines.

In October 2018, Daimler and Geely agreed to form a 50/50 ride-hailing venture in China.

As of Jan. 7, US$1 was equivalent to 6.94 Chinese yuan.