(Yicai Global) March 29 -- Auto heavyweights Geely Automobile Holdings and Daimler have joined forces to transform Smart into a made-in-China all-electric global brand.

The two parties will form an equal-stake joint venture this year to jointly develop the next generation of the diminutive Smart electric vehicles, Stuttgart-based Daimler said in a statement without disclosing financial terms.

Hangzhou-based Geely will take on engineering for the new models through its global research and development unit while a team from Mercedes-Benz will handle the design aspect. The pair will set up a new factory in the country and aims to roll out new cars in 2022.

Smart will continue to include compact cars in its future product lineup as part of its overall new model development plan. The two parties did not reveal further details of the China production facility or their future business plan.

Established in 1998, Smart was the first brand under Daimler to be earmarked for a transformation to electric-fueled models. The brand's portfolio of smaller-sized cars has attracted 2.2 million customers to date though it has been unprofitable for years due to pricing and market positioning.

Editor: William Clegg