BMW and Jaguar Land Rover are to join forces on developing electric car technologies.
The car giants said they would together to develop electric motors, transmissions and power electronics.
Both firms have struggled to maintain profit margins amid falling car sales and higher costs as well as the need to invest in future technologies.
Car firms are being forced to make low emission vehicles to meet more stringent anti-pollution rules.
There have been a number of similar tie-ups aimed at sharing the costs of developing electric cars.
Volkswagen and Ford, for example, are working together on new vehicles. Meanwhile, rivals FiatChrysler and Renault are exploring a $35bn tie-up.
BMW board member Klaus Froehlich said: “Together, we have the opportunity to cater more effectively for customer needs by shortening development time and bringing vehicles and state-of-the-art technologies more rapidly to market.”