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Chinese automaker Geely will purchase a 50% stake in Daimler’s Smart car division, as the German manufacturer seeks to promote electric vehicles and recover its losses from the flagging micro car business.

In a statement released Thursday, the two companies said they would form a 50-50 globally focused joint venture to “own, operate and further develop Smart … as a leader in premium-electrified vehicles.” The new firm’s board will include an equal number of executives from the Chinese and German companies.

The move comes as Daimler seeks to recoup some of its losses from the Smart brand. According to investment research firm Evercore ISI, Smart has been losing up to €700 million (around $790 million) a year. The joint venture also follows an agreement last year in which the two companies partnered on ride-hailing services to take on industry giant Didi.

Geely owns Swedish vehicle producer Volvo and British sports car maker Lotus. The company bought a $9 billion stake in Daimler at the beginning of 2018.

Geely chairperson Li Shufu said in the statement that the companies plan to “further push the introduction of premium electric products to give a better mobility experience.” The new company will target both the Chinese and international markets.

Daimler and Geely will build a factory in China and expect to sell their small electric cars by 2022. The vehicles will be designed by Mercedes Benz, which is owned by Daimler, and engineered by Geely. Before the launch of the new Smart models, the current generation will continue being produced at Daimler’s plant in France.

Daimler has increased its presence in China over the course of the past few years. The company was granted a license to test autonomous vehicles in Beijing—the first non-Chinese automaker to be given such permissions. Daimler has also forged ties with internet giant Baidu. The two companies signed an agreement last year to deepen a partnership on vehicle connectivity services. As part of the deal, Daimler planned to integrate Baidu’s services into Mercedes Benz’s infotainment system.

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