Chinese electric car maker BYD Co and Toyota Motor Corp said on Thursday they planned to set up a joint venture to design and develop battery electric cars.

The two companies have signed an agreement to establish a joint company to research and development for battery electric vehicles (BEVs). The new R&D company, which will work on designing and developing BEVs (including platform) and its related parts, is anticipated to be established in China in 2020, with BYD and Toyota to evenly share 50% of the total capital needed. Additionally, BYD and Toyota plan to staff the new company by transferring engineers and the jobs currently involved in related R&D from their respective companies.

BYD was founded in 1995 as a battery business and has grown into a total energy solution company, manufacturing not only electrified vehicles but other products such as large-size energy storage cells. In 2008, BYD became the first company in the world to sell mass production of plug-in hybrid electrified vehicles (PHEVs). Since 2015 onwards, BYD's sales of BEVs and PHEVs have been ranked first in the world for four consecutive years.

Since Toyota launched the Prius, the world's first mass-produced hybrid electric vehicle (HEV), in 1997, the company has become a pioneer of electrified vehicle development with a focus on HEVs. Toyota has sold more than 14 million electrified vehicles worldwide. In China, Toyota is also working on spreading electrification and also developing vehicles which meets Chinese customer's needs in collaboration between Toyota Motor Engineering & Manufacturing (China) Co., Ltd. (TMEC) and the R&D centers established at Chinese joint-venture companies with China FAW Group Corporation (FAW) and Guangzhou Automobile Group Co., Ltd. (GAC).