Chinese carmaker BYD said Friday it had signed a contract with German auto giant Daimler AG to establish a joint venture in China.

The joint venture will focus on developing a new generation of electric cars which will combine Daimler's expertise in car structure and safety and BYD's battery and drive technologies.

The new firm will have a registered capital of 600 million yuan ($87.88 million), BYD said.

Each company will hold a 50-percent stake in the venture.