German automaker Daimler AG and China's Zhejiang Geely Holding Group announced Thursday the formation of a joint venture to operate and develop small-car brand Smart globally as a leader in premium-electric vehicles.

Headquartered in China, the joint venture is expected to be finalised by the end of 2019. The two companies will each hold a 50 percent stake.

According to the agreement, a new generation of Smart electric models will be assembled at a new purpose-built electric car factory in China with global sales due to begin in 2022.

The joint venture partners have agreed that the new models will be styled by the worldwide Mercedes-Benz Design network with engineering from Geely global engineering centers.

The board of directors of the new Smart joint venture will be made up of six executives with equal representation from both parties.

"For more than 2.2 million customers, Smart represents a pioneer in urban mobility. Based on this success story, we look forward to further enhancing the brand with Geely Holding, a strong partner in the electric vehicle segment," said Dieter Zetsche, chairman of the board of management of Daimler AG.

"Geely Holding and Daimler look forward to this challenging and exciting new project, through which we will further push the introduction of premium electric products to give a better mobility experience to our customers," said Li Shufu, chairman of Geely Holding.

Prior to the launch of the new models in 2022, Daimler will continue to produce the current generation of Smart vehicles in its Hambach plant in France and at Novo Mesto, Slovenia.

Financial terms of the Smart joint venture have not been disclosed.

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