Renault-Nissan and Daimler will be building cars together in Mexico.

The Renault-Nissan Alliance and Daimler AG are expanding their cooperation with joint development of premium compact vehicles and joint production in Mexico.

Renault-Nissan CEO Carlos Ghosn and Daimler CEO Dieter Zetsche announced June 27 that their companies have agreed to establish a 50:50 joint venture, the business entity that will oversee construction and operation of the new plant in Aguascalientes in north-central Mexico.

Both partners stated the new plant will be built in the immediate vicinity of an already existing Nissan plant and will have an annual capacity of 300,000 vehicles. Start of production is planned for 2017 with Infiniti models and in 2018 for Mercedes-Benz brand vehicles.

Daimler and Nissan said they will share the total investment cost of approximately €1 billion. The companies also stated they will add almost 5,700 jobs (including engineering, line workers and support staff) by the time the plant reaches full capacity, expected in 2021.

“Joint development of compact premium vehicles and joint production in Aguascalientes together represent one of the largest projects between the Renault-Nissan Alliance and Daimler,” said Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance. “It also shows how our collaboration, which began in Europe, has become global in scope.”

In a joint press release, both companies said close collaboration between Infiniti and Mercedes-Benz at every stage of development, from advanced research and design to production, will ensure that vehicles within the scope of the project will clearly differ from each other in terms of product design and specifications.

“In Aguascalientes, we will take our successful partnership to the next level by combining the skills of our two companies Daimler and Nissan in one production plant,” said Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. “Just over four years after the cooperation was founded, the decision for the new plant in Mexico is a major milestone.”

Nissan has been producing vehicles in Aguascalientes since 1992, and the plant has expanded significantly in the past year. In November, Nissan opened the first stage of a US$2 billion manufacturing complex in Aguascalientes. This increased Nissan’s total capacity in Mexico to more than 850,000 vehicles annually.

Mexico is also an important market for Daimler. The company said it has production plants for trucks and buses in Saltillo, Santiago Tianguistenco and Garcia, a parts distribution center in San Luis Potosí and a remanufacturing plant in Toluca. For passenger cars Daimler has a pre-delivery-inspection and a training center.

The French-Japanese-German industrial cooperation of Daimler and the Renault-Nissan Alliance began in April 2010, with three “pillar projects” primarily focused on Europe. Since then, the portfolio has increased to twelve significant projects, including initiatives from the Americas to Japan.

Last week, Infiniti and Daimler launched production of four-cylinder gasoline engines in Decherd, Tennessee, USA. With an annual production capacity of 250,000 units, the Decherd facility produces engines for use in the Mercedes-Benz C-Class and in the Infiniti Q50.