Chinese battery and automaker BYD Co and automobile inventor Daimler AG have signed an agreement to enter into a "comprehensive technology partnership" for the development of electric vehicles for the Chinese market.

Under the terms of the deal signed in Stuttgart, Daimler's headquarters, on Monday, the two parties intend to develop a new electric vehicle specific to the requirements of the Chinese market.

The vehicle will be marketed under a new brand jointly created and owned by Daimler and BYD, which is backed by US billionaire Warren Buffet, said the two companies in a joint statement. In addition, a common technology center will be established in China to develop, design and test the electric vehicle.

With this cooperation, "Daimler's know-how in electric vehicle architecture and BYD's excellence in battery technology and e-drive systems are a perfect match. Thus, we will be able to participate in the potential growth of electric mobility in China, currently the largest auto market in the world," said Dieter Zetsche, chairman of the board of management of Daimler AG and head of Mercedes-Benz Cars.

Wang Chuanfu, chairman and president of BYD Co Ltd, said he believed that the technology partnership would create a win-win business model for both sides because electric vehicles are especially well-suited for urban driving.

"With its many metropolitan areas, China has the potential to be among the world's largest markets for zero-emission vehicles. Daimler and BYD will accelerate the growth of electric mobility in China," said Wang.

BYD signed another agreement in May 2009 with the world's largest automaker Volkswagen to cooperate over hybrid cars and lithium battery-powered electric vehicles.

The Chinese government has supported the development of electric mobility with favorable policies and subsidies to promote widespread usage of the vehicles across the country.

Moreover, State Grid and major oil providers are establishing a charging station network for them.

Daimler, a leader in developing automotive architecture for zero-emissions driving, recently launched its smart electric-drive model globally. Mercedes-Benz's China chief Klaus Maier hopes to bring it to the China market in two years.

BYD is China's leading manufacturer in developing advanced battery technology, a field it has invested in since 1995. Entering the automotive sector in 2003, it has been the fastest growing Chinese automobile manufacturer.

BYD debuted the world's first dual-mode hybrid electric vehicle, the F3DM, in December 2008. Soon, the company will officially launch the e6, a 100 percent electric vehicle, and export it to the United States market this year.