Germany's Daimler and its Chinese joint venture partner BAIC Motor Corp. have agreed to jointly invest 5 billion yuan ($735 million) in battery electric vehicle production in China by 2020 and to provide the infrastructure needed.

Part of the money will be invested in a battery factory to be built in China by joint venture Beijing Benz Automotive Co., Daimler said in a statement on Wednesday.

"By 2025, the Chinese market will have a substantial share in global sales of Mercedes-Benz electric vehicles," management board member Hubertus Troska said.

Daimler and BAIC signed a framework agreement last month to upgrade production facilities at Beijing Benz Automotive Co. to make battery electric vehicles and plug-in hybrids.

Daimler and other foreign automakers are investing heavily to launch EV production in China to meet proposed sales quotas that will start to take effect in 2018.