German automaker Daimler and China's Geely, its largest shareholder, are setting up a joint venture to develop and operate Daimler's Smart compact car brand worldwide as an all-electric car maker.

The two companies said Thursday that the 50-50 joint venture should be finalized by the end of this year. They didn't disclose financial details.

The agreement calls for the next generation of Smart cars to be designed by the Mercedes-Benz design network, with engineering from Geely. The companies said the electric models will be assembled at a new factory in China and global sales are expected to begin in 2022.

Daimler CEO Dieter Zetsche said that, separately, his company's Mercedes-Benz division will produce a compact electric vehicle at the existing plant in Hambach, France.